Puma Biotechnology Inc (NYSE:PBYI) Swamped by New Shares

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An announcement of a secondary offering of shares by Puma Biotechnology Inc (NYSE:PBYI) forced dilution-panicked investors to bail from the stock Wednesday.

The stock skidded 18.9% down to close at $42.70 on volume of 4.13 million shares, more than four times its average volume of 979.93K shares.

The fall had the stock perilously perched just on the 200 day moving average.

Puma Biotechnology is developing innovative therapeutics for the treatment of cancer and is focused on developing neratinib for patients with HER2-positive breast cancer.

Puma Biotechnology Inc (NYSE:PBYI) to sell up to $172.5 million in shares

Puma announced Wednesday that it was launching a fully underwritten secondary public offering of $150 million in shares with an additional $22.5 million to underwriters in case of over allotments.

Last month, the company announced that the US Food and Drug Administration had accepted for review the New Drug Application (NDA) for its lead product candidate PB 272 (neratinib) for the extended adjuvant treatment of patients with early stage HER2-overexpressed/amplified breast cancer who have received prior adjuvant trastuzumab (Herceptin)-based therapy.

Puma Biotechnology Inc (NYSE:PBYI) prices secondary public offering

The company announced late last night the pricing of an underwritten public offering of 3.75 million shares of its common stock at a public offering price of $40 per share. The offer is expected to close on or about October 25, 2016.

The proceeds of the offering would likely be used by the company for developing its drug pipeline, clinical trial expenditures, pre-commercialization activities and general corporate and working capital purposes.

Analysts on Puma Biotechnology Inc (NYSE:PBYI)

Analysts at Credit Suisse have an Outperform rating on Puma and on September 22, raised their price target on the stock from $54 to $111.

On September 21, analysts at Stifel upgraded their rating from Hold to Buy and raised the price target from $61-$88.

Technically, if the stock is unable to hold its own above the 200 day moving average of $42.70, investors can expect further downside.

At the time of writing, PUMA is trading pre-market at $41.25, down 3.40%.

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