Vertex declines after announcing stock sale
BY MARLEY SEAMAN 09.18.08, 1:44 PM ET
Shares of Vertex Pharmaceuticals Inc. fell Thursday after the drug maker said it will sell 7.5 million shares of new stock to raise cash.
The Cambridge, Mass., company said late Wednesday that it would sell the stock, and early Thursday it priced the offering at $25.50 per share, which would allow it to raise $191.3 million. Vertex said it will use the funds to develop its late stage drug candidates for hepatitis C and cystic fibrosis, as well as for general corporate purposes.
Its shares have been trading slightly higher than that price, closing Wednesday at $26.57. In afternoon trading Thursday, Vertex shares gave up $1.37, or 5.2 percent, to $25.20 and fell as low as $24.62 earlier in the session.
The stock last traded at $25.50 on Sept. 10. Vertex had 140.6 million shares outstanding as of May 6, according to a filing with the Securities and Exchange Commission.
Cowen and Company analyst Rachel McMinn said the move was necessary, and will give Vertex financial flexibility in 2009.
"While the timing appears unusual in the midst of an economic meltdown, Vertex would have needed access to capital in the next 12 months to continue development of its lead pipeline product telaprevir, for hepatitis C, and its follow on product, VX-770 for cystic fibrosis," she said.
She said she thinks the company will need to raise more money before it becomes profitable, however.
Goldman Sachs (nyse: GS - news - people ) will manage the books for the stock offering.
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