Pharmacyclics Inc. (NASDAQ: PCYC) has had a monster stock performance, with gains of much more than 200% over the past year. Now the company is doing what some shareholders will feel bilked over, but that is prudent business. The biotech player is raising some capital by selling stock.
The cancer-target company sold 2,200,000 shares of its common stock in an underwritten registered public offering at $94.20 per share. This represents about 3.1% of the shares of common stock currently outstanding. What is amazing is that the shares sold went off at yesterday’s closing price rather than at a discount. After such a rise, perhaps the company should have considered selling more stock to raise even more cash.
Unlike some other offerings in which insiders cash out, all the shares sold were by the company. It is also interesting that the company used only J.P. Morgan Securities as the sole manager for the offering. This would have been an opportunity to go out and get more analyst coverage. Note that compared to the $94.20 as of yesterday’s close, the consensus analyst price target is only $89.90 from Thomson Reuters.
Pharmacyclics has granted J.P. Morgan a 30-day option to purchase up to an additional 330,000 shares of common stock to cover overallotments. The gross proceeds are just over $238 million before fees, discounts and commissions, and Pharmacyclics had a market cap of almost $6.8 billion as of yesterday’s close.
Jon C. Ogg