Esperion Shares Fall 19% on Discounted $75M Stock Offering
The pharmaceutical company priced 30 million shares at a significant discount to its last closing price to raise capital, triggering a sharp sell-off.
Shares of Esperion Therapeutics (ESPR) plunged more than 19% in pre-market trading after the company at a price well below its recent market value.
The pharmaceutical firm, which specializes in treatments for elevated bad cholesterol, priced 30 million shares of its common stock at $2.50 per share. This figure represents a to the stock's previous closing price of $3.09, prompting an immediate negative reaction from investors.
The offering, which is expected to close in the coming days, is a classic case of shareholder dilution. By issuing a large number of new shares at a discount, the company increases its total shares outstanding, which reduces the ownership stake of existing shareholders and often puts downward pressure on the stock price. The gross proceeds from the sale are expected to be approximately $75 million, before deducting underwriting discounts and other expenses.
Under the terms of the deal, underwriters have a 30-day option to purchase up to an additional 4.5 million shares of common stock at the public offering price. According to , Piper Sandler & Co. and Cantor Fitzgerald & Co. are serving as the joint book-running managers for the capital raise.
Esperion focuses on developing and commercializing oral, non-statin medicines for patients struggling with high levels of low-density lipoprotein cholesterol (LDL-C), a major risk factor for cardiovascular disease. Companies in the biotechnology sector frequently use secondary stock offerings to fund research and development, commercialization efforts, and general corporate operations. While necessary for growth, these capital raises can be painful for investors in the short term due to the dilutive effect on their holdings.