Reata Pharmaceuticals Just Raised $505 Million to Treat Orphan Diseases: What it Means for Investors

Last week, Reata Pharmaceuticals (NASDAQ: RETA) closed its secondary offering, raising a whopping $505 million by selling shares at $183 per share, tripling the $240 million nest egg the biotech had at the end of the third quarter.

Technically, the company didn't need to raise capital right now; based on its planned burn rate, Reata had enough cash to get it through next year. But after a very successful October in which Reata's shares jumped more than 150%, it certainly a good time for management to raise capital. Selling shares at the higher price means the company could raise the same capital selling fewer shares, which causes less dilution for current shareholders.

Reata's successful October came when the company released phase 2 data for omaveloxolone in patients with Friedreich's ataxia, a neurodegenerative disease with no FDA-approved treatments.

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Source Fool.com