AVEO Pharmaceuticals, Inc. (AVEO) Shares Tumble on the Back of Stock Dilution


AVEO Pharmaceuticals, Inc. (NASDAQ:AVEO) investors are having a rough morning, after the drug maker announced that it has priced an underwritten public offering of 30,000,000 shares of common stock at a price to the public of $0.50 per share, a 23% discount to yesterday’s closing price. AVEO expects to receive total gross proceeds (before underwriting discounts and estimated offering expenses) of approximately $15 million.

In reaction, AVEO shares are falling nearly 20% to $0.52 in early trading Tuesday.

All of the shares in the offering are to be sold by AVEO. AVEO has also granted the underwriter a 30-day option to purchase up to an additional 4,500,000 shares of common stock on the same terms and conditions. Closing of the offering is expected to occur on or about March 31, 2017, subject to customary closing conditions.

On the ratings front, AVEO has been the subject of a number of recent research reports. In a report issued on March 23, FBR analyst Vernon Bernardino reiterated a Buy rating on AVEO, with a price target of $3.00, which represents a potential upside of 364% from where the stock is currently trading. Separately, on January 5, Piper Jaffray’s Edward Tenthoff maintained a Buy rating on the stock and has a price target of $1.75.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Vernon Bernardino and Edward Tenthoff have a yearly average loss of -7.3% and -3.8% respectively. Bernardino has a success rate of 29% and is ranked #4425 out of 4555 analysts, while Tenthoff has a success rate of 35% and is ranked #4186.

AVEO Pharmaceuticals, Inc. operates as a biopharmaceutical company, which engages in the advancement of therapeutics for oncology and other areas of unmet medical need. Its products include Tivozanib, Ficlatuzmab, AV-203, AV-380, and AV-353. It focuses on the development of its lead candidate, Tivozanib, in North America as a treatment for renal cell carcinoma and other cancers. 

 

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