Why Centessa Pharmaceuticals Stock Crushed the Market Today

U.K.-headquartered biotech Centessa Pharmaceuticals (CNTA +18.46%) is drawing from the investor well for new financing, and the market is clearly pleased with the effort. On Wednesday, shares of the clinical-stage company surged 18% higher, obliterating the marginal (less than 0.1%) rise of the bellwether S&P 500 (^GSPC +0.06%).

Going to the investor well

After market close, Centessa announced the pricing on an upcoming secondary issue of its American Depositary Shares (ADSes). Just under 11.63 million of these securities will be sold in an underwritten public offering priced at $21.50 apiece. The resulting gross proceeds should amount to roughly $250 million.

Centessa added that the underwriters of the issue, a syndicate that includes Jefferies and Guggenheim Securities, have been granted a 30-day option to collectively buy up to an additional 1.7 million-plus ADSes at the same price.

In a regulatory document, Centessa said it would utilize its share of the proceeds to help finance the continued development of its product pipeline. It would also use the monies for “general corporate purposes.”

A drop in the bucket

Centessa aims to close the offering on or about this coming Friday, Nov. 14. While new equity issues tend to raise fears of dilution, this isn’t much of a concern with the biotech. After all, it is already quite heavily capitalized, with a nearly $3.6 billion market cap as of Wednesday night.