San Diego based biopharmaceutical company Fate Therapeutics (NASDAQ:FATE) put its capital raising fate in the hands of equity investors by announcing a secondary share offering this week. The public offering will include 6,181,562 shares of common stock at a price of $28.31 per share.

The company plans to use the roughly $164.2 million proceeds for a variety of purposes including to fund its ongoing clinical trials and nonclinical studies. Funds are also expected to be deployed toward the construction of a new manufacturing facility, the manufacture of clinical product candidates, preclinical research, and general corporate purposes.

Following the completion of the offering and applicable antitrust waiting periods, Fate also expects to execute a private placement with Johnson & Johnson’s venture capital arm for 1,766,160 shares of common stock worth approximately $50 million.

Fate Therapeutics SEC Filings

Offering bolsters an already healthy balance sheet

The stock offering comes less than a month after the company reported financial and operational results for the first quarter. Revenues were down 4% to $2.5 million all of which was derived from Fate’s collaboration with Ono Pharmaceutical for the development of two off-the-shelf CAR-T cell product candidates. The novel off-the-shelf CAR-T technology is designed to help the immune system target multiple myeloma as well as a broad range of solid tumors.

Fate exited the first quarter with $219.4 million in cash and short-term investments and in April 2020 received an additional $100 million in cash in connection with its collaboration with Johnson and Johnson subsidiary Janssen Biotech.

Fate develops programmed cellular immunotherapies for the treatment of cancers and immune disorders. Its product candidates are based on the company’s proprietary induced pluripotent stem cell (iPSC) platform. The promising immuno-regulatory product candidate ProTmune is currently being evaluated as part of a phase 2 clinical trial for the prevention of graft-versus-host disease (GVHD). It also has immune-oncology product candidates that include natural killer (NK) and T-cell immunotherapies.

Fate’s add-on equity offering is expected to close on or about June 11th. The additional capital will strengthen the company’s already well-managed balance sheet that includes an increasing cash balance, expanding asset base, and minimal debt. It is in a favorable position to advance its product pipeline which includes three clinical-stage cell therapy candidates.

Looking ahead

The market has reacted favorably to the combination of the public and private offerings because the capital infusion will provide the flexibility to pursue several growth-related initiatives most notably the expansion of its manufacturing footprint.

Shares of Fate Therapeutics gapped up approximately 25% on the day the offering pricing was confirmed and look poised to revisit their all-time high of $37.24 set last month. Following a sluggish post-IPO price trend that last several years, the stock has rallied for a 96% annualized return over the last three years.

Fate is one of the most well-liked biotech stocks amongst sell-side analysts. All but one of 14 analysts have a buy rating with a price target range of $31 to $57. The high-flying mid cap is scheduled to report second quarter performance on August 4th.

Fate Therapeutics SEC Filings


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