89bio (NASDAQ:ETNB), Inc., a biopharmaceutical company, has entered into an agreement with major underwriters for a significant public offering and the issuance of pre-funded warrants, according to a recent SEC filing. The San Francisco-based firm, specializing in pharmaceutical preparations, has partnered with Goldman Sachs (NYSE:GS) & Co. LLC, Leerink Partners LLC, and Evercore Group L.L.C. for the transaction.
On Monday, the company agreed to sell 11,455,882 shares of common stock at $8.50 each and issue pre-funded warrants for 3,250,000 shares at $8.499 per share. These warrants, unlike common stock, come with an exercise price of $0.001 each. The underwriters also have a 30-day option to buy up to an additional 2,205,882 shares at the same price, minus underwriting discounts and commissions.
The pre-funded warrants can be exercised at any time after issuance. However, limits are placed to prevent a single holder, along with affiliates, from owning more than 4.99% or 9.99% of the outstanding common stock post-exercise, with an option to adjust this cap to a maximum of 19.99% following a 61-day notice period to the company.
The net proceeds from this offering are expected to be approximately $118.4 million after accounting for underwriting discounts and commissions and estimated offering expenses. The offering, detailed in a final prospectus supplement filed on Tuesday, is based on a shelf registration statement effective since May 23, 2023, and is set to close today.
89bio has agreed to indemnify the underwriters against certain liabilities, including those under the Securities Act of 1933, as amended. The legal opinion regarding the issuance and sale of the shares and warrants has been provided by Gibson, Dunn & Crutcher LLP.
The information is presented as a factual report on 89bio's recent business activities and financial arrangements.
In other recent news, 89bio has appointed Francis Sarena as Chief Operating Officer and Dr. Charles McWherter to its Board of Directors.
Analysts at UBS have maintained a Buy rating on 89bio, while Evercore ISI reduced the price target due to projected expenses. RBC Capital Markets and H.C. Wainwright also adjusted their price targets, maintaining their respective ratings.
These are recent developments as 89bio continues to progress with its lead candidate, pegozafermin, currently in advanced clinical trials. The results of these studies are anticipated in 2025.
InvestingPro Insights
To provide additional context to 89bio's recent public offering, let's examine some key financial metrics and insights from InvestingPro. As of the latest data, 89bio (ETNB) has a market capitalization of $946.12 million. The company's stock has shown strong performance over the past month and quarter, with price total returns of 12.71% and 16.61% respectively, despite a recent 10.49% decline in the past week.
InvestingPro Tips highlight that 89bio holds more cash than debt on its balance sheet, which could be seen as a positive factor in light of the recent capital raise. However, it's important to note that the company is quickly burning through cash and is not profitable over the last twelve months. This context helps explain the motivation behind the public offering, as the company likely aims to bolster its financial position to support ongoing operations and research.
The company's P/B ratio stands at 2.5, while its adjusted P/E ratio is -3.18, reflecting its current unprofitable status. An InvestingPro Tip indicates that analysts do not anticipate the company will be profitable this year, which aligns with the reported operating income of -$303.86 million for the last twelve months.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for 89bio, providing a deeper understanding of the company's financial health and market position.
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