Precision’s Novartis Deal ‘Adds Validation’ While Financing Could Improve Sentiment, Analyst Says
2022.06.22 15:41
Precision’s (DTIL) Novartis Deal ‘Adds Validation’ While Financing Could Improve Sentiment, Analyst Says
By Vlad Schepkov
Shares of Precision BioSciences (NASDAQ:DTIL) have given back much of late Tuesday’s fireworks-like gains – the stock soared as much as 150% at its peak – but is still keeping traders busy on the morning of Wednesday, following two major news announcements the day prior.
First, came the Novartis (NYSE:NVS) deal: DTIL snapped up a research and licensing partnership with the pharmaceutical giant over Precision’s ARCUS-based in vivo gene editing program. Under the terms of the agreement, DTIL is getting $75 million upfront, and is eligible for $1.4 billion of potential future milestones and royalties.
The announcement was closely followed by the second one of an equity raise: the company took the opportunity to price a nearly 36 million share offering at $1.39 per share (the stock’s closing price prior to the Novartis news), for total proceeds of $50 million.
The offering quickly brought the soaring shares back to earth and saw the stock plummet from $3.5 to under $2.
Still, Stifel analyst Benjamin Burnett believes it was the right call from a business standpoint, noting the raise is “ultimately good for the longevity of the business and likely adds enough runway to get through multiple inflection points.” He continues, saying that “cash runway has been a significant overhang to the stock” and believes the deal doesn’t just provide much-needed funding, but also has “the potential to improve sentiment.”
Commenting on the Novartis deal specifically, he believes it “adds validation to DTIL’s gene editing capabilities, which are largely not credited in the stock”, as he reiterates a “Buy” rating on the shares.
DTIL shares posted an all-time low of $1.11 just a few days prior, and are trying to base above $1.50 as of mid-morning, holding above the prior close and equity raise price of $1.39.
