Belite Bio Shares Pull Back After $350 Million Stock Offering
Company capitalizes on record-high share price to fund late-stage development of its lead ophthalmology drug, Tinlarebant, causing near-term dilution.
Shares of Belite Bio Inc. (NASDAQ: BLTE) fell on Tuesday after the clinical-stage biopharmaceutical company announced the pricing of a $350 million public offering, a strategic move to fund its promising eye disease treatment following a record-setting surge in its stock price.
The San Diego-based company priced its offering of 2,272,727 American Depositary Shares (ADSs) at $154.00 per share. The move comes just as Belite Bio's stock has experienced a dramatic run-up, gaining over 110% in the past six months and hitting an all-time high. The offering price was set at the peak, allowing the company to raise a substantial amount of capital while minimizing the per-share discount often seen in such transactions.
Despite the strategic timing, the introduction of new shares is expected to dilute the ownership stake of existing shareholders by approximately 6.5%, placing immediate downward pressure on the stock. In Tuesday morning trading, shares of Belite Bio retreated from their record highs, a typical market reaction to dilution events.
The proceeds are earmarked for the advancement and potential commercialization of Belite Bio's lead drug candidate, Tinlarebant. This oral medication is in late-stage development for treating Stargardt disease (STGD1), an inherited juvenile macular dystrophy that causes progressive vision loss, and geographic atrophy (GA), an advanced form of dry age-related macular degeneration (AMD).
Belite Bio has made significant clinical progress, recently announcing that its Phase 3 DRAGON trial for Tinlarebant in STGD1 met its primary endpoint. The positive results prompted China's National Medical Products Administration (NMPA) to accept a New Drug Application with priority review, according to a company announcement.
"Raising capital from a position of strength is a classic biotech playbook move," said one healthcare sector analyst. "While the new shares create short-term pressure, securing a $350 million war chest is critical to fund the expensive late-stage trials and build out a commercial infrastructure needed to launch a drug successfully."
The offering is being managed by a syndicate of prominent banks, with Morgan Stanley, Leerink Partners, BofA Securities, and Cantor serving as joint book-running managers. The company has also granted underwriters a 30-day option to purchase up to an additional 340,909 ADSs, which could increase the total gross proceeds.
Belite Bio's pipeline is focused on novel therapies for ocular diseases with no approved oral treatments. Tinlarebant works by reducing the accumulation of toxic vitamin A byproducts in the eye that are implicated in causing retinal damage in STGD1 and GA. The drug has received Orphan Drug, Rare Pediatric Disease, and Fast Track designations from the U.S. Food and Drug Administration, highlighting the significant unmet medical need for these conditions.
Despite the immediate stock pullback, Wall Street analysts remain broadly optimistic about Belite Bio's long-term prospects, with an average price target of $128.17. The successful financing is seen as a crucial de-risking event, providing the company with the necessary runway to see its lead candidate through regulatory submission and a potential market launch. The offering is expected to close on or about December 3, subject to customary closing conditions.