Celcuity double doses for upsized US$260m equity raising
Celcuity secured an upsized US$260m late on Tuesday from a combo sale of common stock and convertible debt to fund development of its promising breast cancer drug.
After one day of marketing, Jefferies, TD Cowen and Leerink Partners priced 1.8m shares and 400,000 pre-funded warrants (2.24m in total) shares at US$38, a 1.3% discount to the US$38.50 Tuesday closing share price. The banks priced the US$175m six-year CBs at a 2.75% coupon and conversion price of US$51.30, a 35% premium to the common stock price.
ICR Capital was an independent adviser on the financing.
The late-stage biotech was able to increase the size of the combined financing to US$260m, from the US$225m marketed, on strong investor demand. It had planned to purchase a capped call to offset dilution from the CBs to a premium share price but opted instead to keep that money.
Celcuity's shares closed on Wednesday at US$40.30.
On Monday morning, Celcuity released Phase III trial results showing its breast cancer drug dramatically extended the life of patients, leading to a flurry of investor interest that saw its shares soar by 167.2% from US$13.77 previously.
It is commonplace for biotechs to confidentially market trial results to investors when raising capital. Also known as a wall-cross, confidential marketing limits issuer flexibility on the price and size of a financing.
"This financing was widely anticipated, so a wall-cross would have provided only a marginal benefit,” one banker involved in the offering told IFR. “Management was more concerned about stock dilution.”
Celcuity plans to seek regulatory approval for the breast cancer drug later this year in hopes of launching commercial sales in 2026.
This was a highly nuanced financing designed to limit the amount of stock sold and preserve earnings power.
The convert allowed the sale of stock at a premium, while the common stock offering increased stock-borrow and accommodated existing shareholders seeking to avoid diluting their ownership, bankers involved in the financing told IFR.
Baker Brothers is Celcuity's largest shareholder with an 11.9% stake. The life sciences-focused hedge fund is known for participating in stock sales to preserve ownership.
Celcuity now has roughly US$460m of cash to finish clinical trials and apply for FDA approval next year.
LifeSci Capital analysts expect Celcuity's drug to be approved in combination with two existing drugs as a second or third treatment option for breast cancer patients who relapsed or did not respond to previous treatments.
A second Phase III trial is underway testing the same drug as a first treatment option, putting it on track for approval in the first half of 2029. If broadly approved, LifeSci Capital analysts think Celcuity's drug is capable of generating US$1.2bn of global sales by 2034.