Calithera Biosciences (CALA) Stock Plunged 33% on a $10M Share Issue

Trade Calithera Biosciences stock Your capital is at risk
Simon Mugo
Updated: 30 Mar 2022

Key points:

  • Calithera Biosciences stock plunged 33% after a $10 million share issue.
  • Investors reacted negatively to the capital raise, evidenced by the selloff.
  • The company is set to release its full-year 2021 results tomorrow.

The Calithera Biosciences Inc (NASDAQ: CALA) stock price plunged 33% after announcing the pricing of its $10 million capital raise via the issuance of 18.5 million shares of its common stock.

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Also read: The Five Best Pharmaceutical Stocks To Watch in 2022.

Investors reacted negatively to the stock issue despite the company pricing each of the new shares at $0.54, representing a slight discount to CALA stock’s closing price of $0.597 on Tuesday, March 29, 2022.

The new shares are accompanied by a warrant to purchase an additional share for $0.54, which can be exercised immediately but will expire 18 months from the day they were issued. The biotech company expects to generate approximately $10 million from the share issue.

Calithera Biosciences recently announced that it would release its full-year 2021 results on Thursday, March 31, 2022. Investors are waiting to see how the clinical-stage, precision oncology biopharmaceutical company did last year.

Today’s market reaction to the share issuance shows that existing investors did not like the additional dilution and sold their shares in protest. The company has a lot to prove tomorrow when it releases its annual results.

Suppose the results are worse than those attained in 2020, we could witness a further decline in CALA shares. However, a positive result could see the company recoup today’s losses and rally higher.

In March, Claithera announced that it would present promising data highlighting its newly-discovered synthetic lethal target VPS4 at American Association for Cancer Research (AACR) 2022 Annual Meeting, held April 8-13, 2022, in New Orleans, LA.

Investors are also looking forward to the data gathered from a preclinical study of a novel series of vacuolar protein sorting-associated protein 4A (VPS4A) inhibitors that are currently being advanced via lead optimisation.

Susan Molineaux, Calithera Biosciences’ CEO, said: “The data being shared at the AACR annual meeting suggest that inhibition of VPS4A is a promising approach to treat cancers across a wide variety of cancer types that harbor VPS4B deletions. We believe the discovery of this series of VPS4A inhibitors is a significant step forward in our efforts to expand our pipeline of targeted therapies to ultimately treat patients with high unmet need,”

Adding:

“Additionally, we are excited about the progress we have made in advancing these discoveries as we focus on lead optimization. Synthetic lethal cancer therapies are highly promising, and we look forward to contributing to this rapidly advancing field with this novel mechanism.”

Calithera has multiple promising projects, but I would wait for tomorrow’s earnings results before deciding whether to buy the company’s shares.

*This is not investment advice. Always do your due diligence before making investment decisions.

Calithera Biosciences stock price.

Calithera Biosciences stock price 30-03-2022
Source: Tradingiew

Calithera Biosciences' stock price plunged 33.08% to trade at $0.40, falling from Tuesday’s closing price of $0.5977.

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