Olema’s Proposal Dampens Hopes for Trial, Sparks Decline Due to Dilution Concerns

Shares of Olema Pharmaceuticals (OLMA) dropped sharply in after-hours trading after the biopharmaceutical firm revealed plans for a public offering of common stock and pre-funded warrants, with the stock falling between 6.9% and 7.2%

about potential dilution and of its intentions. The offering, for which TD Cowen is acting as the book-running manager, sold by and to acquire up to 15% more shares, including those related to the pre-funded warrants. This move comes as Olema , which includes palazestrant (OP-1250), now in Phase 3, and OP-3136, a KAT6 inhibitor currently in Phase 1. The stock's drop reflects the market's usual caution regarding new equity offerings, which can reduce the value of existing shares. about 81% over the last half-year, reaching $20.14, but the recent fundraising announcement dampened earlier positive sentiment. to advance its research, though it did not specify the offering's size or the anticipated proceeds. The deal will be conducted under a shelf registration statement submitted to the SEC in January 2025. The timing of the offering follows a period of mixed developments for Olema. for giredestrant—a selective estrogen receptor degrader (SERD) for breast cancer—which led to a 123% pre-market surge in Olema's shares. Roche's findings, which demonstrated significant improvement in invasive disease-free survival, for SERD drugs, where Olema's palazestrant is also in late-stage trials.

However,

, with analysts observing that Roche's data overshadowed Olema's own results. Despite the recent volatility, as H.C. Wainwright and set a $28.00 price target, citing Olema’s drug pipeline, while Guggenheim and a $20.00 target, highlighting the company’s standing in the oral SERD market. Olema’s public offering highlights the challenge of balancing fundraising for development with investor concerns about dilution. Company management on market conditions and that there are no assurances regarding its completion or terms. could lead to further share issuance, so investors will be watching closely to see how the deal unfolds and how Olema manages competition in the SERD field.