Shares of Biomea Fusion Inc. (NASDAQ: BMEA) saw a significant drop after the company unveiled details of its latest public offering, which caused investor concern regarding stock dilution and pricing.
In this public offering, Biomea is set to sell 11.2 million shares of common stock and an equivalent number of warrants that allow investors to purchase additional shares. Among these securities, some investors will also receive pre-funded warrants for up to 1 million shares, coupled with warrants to buy another 1 million shares.
Moreover, the underwriters have a 30-day option to purchase up to 1.83 million more shares and additional warrants. Each common stock share and pre-funded warrant will come with a warrant that allows the holder to buy one share of common stock, priced at $2.50.
The offering is projected to generate around $25 million in gross proceeds, with an anticipated closing date of October 8, provided that all customary conditions are met. Jefferies is leading the offering as the sole book-running manager, while H.C. Wainwright & Co. is serving as the lead manager.
The downward trend in Biomea Fusion’s stock price—which fell by 33.9% to $1.76—appears to correlate strongly with investor worries about potential stock dilution, as the introduction of new shares typically diminishes the value of existing stockholdings. Additionally, the offering’s price of $2.05 per share fell below the stock’s previous market value, which may have been interpreted by some investors as a sign of a discount sale.
Compounding these concerns, the offering included warrants priced at $2.50, and the ongoing difficulties faced by the company, including a clinical hold on its trials, likely further fueled the market’s negative response.
This disappointing news arrives just a day after Biomea Fusion shared promising 52-week results from its Phase 2 COVALENT-111 study, which assessed the safety and efficacy of icovamenib in patients with type 2 diabetes. Following an FDA-imposed clinical hold, this analysis focused on 163 patients who completed a significant portion of their treatment. Findings revealed that icovamenib achieved a notable HbA1c reduction of 1.2% among severely insulin-deficient patients, with the most significant improvements occurring in patients who underwent 12 weeks of treatment, who experienced an impressive 1.5% reduction.
Additionally, patients receiving GLP-1 therapy in conjunction with icovamenib showed a 1.3% reduction in HbA1c levels. The drug also maintained a robust safety profile, with no serious adverse events reported and overall it was well tolerated by participants.
As for Biomea’s forthcoming agenda:
- The Food Effect Study (COVALENT-121) is currently underway to refine the dosing criteria for icovamenib, with data expected to be available by December 2025.
- A Phase 2b trial (COVALENT-211) targeting severe insulin-deficient type 2 diabetes patients is slated to begin in the fourth quarter of 2025.
- A Phase 2 trial (COVALENT-212) utilizing GLP-1-based therapy in type 2 diabetes patients is also expected to launch in the fourth quarter of 2025.
- The Phase 1 trial (GLP-131) for Biomea’s oral GLP-1 RA (BMF-650) in obese yet otherwise healthy volunteers is ongoing, with results anticipated in the first half of 2026.
Overall, the combination of the recent stock offering and its implications appears to have initiated a particularly challenging time for Biomea Fusion as it navigates ongoing clinical endeavors and strategic financial decisions.
