Shares of Summit Therapeutics Inc. (NASDAQ:SMMT) fell 12% after the market close on Tuesday following the company's disclosure that it intends to pursue a public offering of common stock totaling $500 million.
Summit said the entire issuance in the underwritten public offering would be offered by the company itself. In addition, the company plans to grant the underwriters a 30-day option to purchase up to an extra $75 million of shares at the public offering price, less underwriting discounts and commissions.
The company specified how it intends to use the proceeds. Summit stated it will apply the net proceeds from the offering, together with its existing cash and cash equivalents, to fund research and development activities for its lead product candidate, ivonescimab. The company also said the funds are intended to support working capital needs and other general corporate purposes.
Summit cautioned that the proposed offering is subject to market and other conditions and that there is no assurance as to whether or when the offering may be completed, nor as to the actual size or terms should it proceed. Those qualifications were included in the company announcement outlining the planned transaction.
J.P. Morgan, Goldman Sachs & Co. LLC and Citigroup were named as joint book-running managers for the proposed offering.
Market reaction and company statements in the filing and press release produced an immediate after-hours move in Summit shares. The company reiterated that the offering remains conditional on market and other factors, and that timing and final terms are not guaranteed.
Investors were advised in the company announcement of the underwriters' 30-day option to acquire additional shares at the offering price less customary discounts and commissions. Beyond the issuer's stated use of proceeds for ivonescimab development, working capital and general corporate purposes, Summit did not provide further breakdowns of allocation or timing for the planned financing.
The notice from Summit did not include a timetable for completion or additional details beyond the underwritten offering structure, the discretionary option for underwriters and the named joint book-runners.