Shares of Response Genetics Inc. jumped nearly 40 percent on Thursday after the Los Angeles diagnostic test developer said it raised $8.8 million in a private placement of its stock, mostly acquired by British drug maker GlaxoSmithKline Plc.
The private placement was composed of 8 million new common shares, priced at $1.10 a share. In its own press release, GlaxoSmithKline, which is based in the London suburb of Brentford, said it bought 5 million of the shares, giving it a 15.2 percent stake in Response Genetics, which specializes in molecular diagnostic tests for cancer.
Response Genetics, which provides services that help GlaxoSmithKline evaluate experimental cancer drugs and vaccines, said the remaining shares were bought by an existing large stockholder whom it did not identify.
"The capital raised will help support our continued efforts in building a sustainable business of high value genetic tests for cancer patients as well as a premier pharmaceutical services business,” said Chief Executive Thomas Bologna in a statement. He added that the company hoped to grow top line revenue with the investment.
Prior to Thursday’s announcement, shares had fallen 41 percent since the beginning of the year as the company reported declining revenue because old service contracts expired. Bologna, who joined the company in December, said in March that the company planned to more aggressively pursue new collaborations with pharmaceutical clients through its services businesses.
Shares closed up 33 cents, or 37 percent, to $1.23 on the Nasdaq.