MoonLake Raises $75M in Offering to Fund Pipeline After Stock Plunge
The clinical-stage biotech is shoring up its balance sheet to advance its lead drug candidate following a steep sell-off tied to mixed clinical trial data.
MoonLake Immunotherapeutics (Nasdaq: MLTX) is raising approximately $75 million in a public stock offering, a strategic move to fund its clinical programs just weeks after disappointing trial data sent its shares tumbling. The company, which is developing treatments for inflammatory diseases, announced the pricing of the underwritten offering on Wednesday, signaling a determined effort to push forward with its lead drug candidate despite recent setbacks.
In a move to bolster its research and development runway, the Swiss-based biotechnology firm priced 7,142,857 of its Class A ordinary shares at $10.50 per share. According to the company's official announcement, the gross proceeds of about $75 million will be used to advance the clinical development of its key asset, sonelokimab, as well as for working capital and other general corporate purposes.
The capital raise comes at a critical juncture for MoonLake. In late September, the company's stock plunged over 80% after its VELA Phase 3 trial for sonelokimab in patients with hidradenitis suppurativa (HS), a chronic skin condition, yielded mixed results. While the drug showed promise, it failed to meet all of its primary endpoints, leading to significant investor concern. Analysts at the time expressed caution, with one Stifel analyst noting that a "clear path to approval" was likely "off-the-table in the near term."
Despite the dilutive nature of stock offerings, which can pressure a company's share price by increasing the number of shares outstanding, the market reaction was unexpectedly stable. Shares of MLTX closed up 1.72% at $10.375 in Wednesday's trading, suggesting investors may view the fresh capital as a necessary step to extend the company's financial runway and support its ongoing clinical efforts.
For clinical-stage biotech companies like MoonLake, which do not yet have revenue-generating products, such offerings are a common and often essential tool to fund costly and lengthy research. The company reported having $380.5 million in cash and equivalents at the end of the third quarter, and this additional capital is expected to provide a crucial lifeline as it navigates the next phase of development for sonelokimab.
Sonelokimab is a Nanobody-based therapy designed to target key cytokines involved in inflammatory diseases. While the HS trial results were a setback, the drug is also being evaluated for other conditions, and the company is banking on its potential in a competitive landscape for immunology treatments. The fresh injection of funds will be vital for these ongoing and future studies.
Wall Street's view on the company remains divided. Analyst ratings compiled before the offering showed a mix of buy, hold, and sell recommendations, with an average price target of $13.08. The latest financing round, while dilutive, provides MoonLake with the resources to continue its work and potentially deliver the positive data needed to win back investor confidence. The company's path forward will now depend heavily on its ability to execute its clinical strategy and demonstrate the therapeutic value of its lead asset.