Shares in Culver City-based pharmaceutical company ImmunityBio Inc. plunged 32% on Dec. 11 to $3.15 a share after a public offering of 33 million shares hit the market at $3 a share, 35% below the previous day’s closing price.
The share price continued to drift down toward that $3 level on Dec. 12, shedding another 3.5% to close at $3.04.
ImmunityBio was expected to receive about $100 million from the offering, with funds going toward efforts to ramp up production and commercialization efforts for its drug Anktiva to treat a form of bladder cancer. The U.S. Food and Drug Administration approved the drug in April; it’s the first marketable drug to come from the immunology company founded a decade ago by surgeon, medical company serial entrepreneur and billionaire Patrick Soon-Shiong.
The money would also go towards research, development and clinical trials of additional uses for Anktiva as well as for general corporate purposes.
ImmunityBio had initially authorized the offering with a shelf registration filed in April, right around the time Anktiva received FDA approval.
New York-based Jefferies Group and Minneapolis-based Piper Sandler acted as joint book-running managers and representatives of the underwriters for the 33.33-million-share offering. BTIG and H.C. Wainwright and Co. were co-lead managers, and D. Boral Capital was co-manager; all three companies are based in New York.
The underwriters have the option to purchase up to an additional 5 million shares in ImmunityBio at the same offering price of $3 per share.
Latest milestone on way to full commercialization
Soon-Shiong founded ImmunityBio a decade ago to pursue development of drugs that use “natural killer” cells to destroy cancer and infected cells without having previously been exposed to the cancer or pathogen. These cells also can communicate with other immune cells to join in on the attack against cancer cells and pathogens.
In March 2021, ImmunityBio merged with then-publicly traded NantKWest, which was making the natural killer cells; the combined company went public under the name ImmunityBio.
Clinical trials for the Anktiva drug were already under way by that point. But in May of last year, the march to drug approval hit a major snag as the FDA rejected the drug, citing concerns about the third-party manufacturing process and requesting more data. That sent ImmunityBio’s stock plunging nearly 60%.
The ImmunityBio team then spent several months addressing the agency’s concerns and in late October resubmitted the Anktiva drug for approval. The agency accepted the drug for reconsideration.
While that delay prompted Soon-Shiong to provide another $400 million cash infusion to the company, it also had a silver lining: the company used that delay period to build up a three-year stockpile of Anktiva and a $250 million cash reserve to market and distribute the drug. That allowed ImmunityBio to begin selling the drug within a few weeks of the FDA approval.
Last week’s $100 million offering allows the company to continue these efforts.
Hit to Soon-Shiong’s net worth
But the offering came at a price: the steep decline in the company’s shares. And the person hurt the most by that plunge was none other than Soon-Shiong himself. As of March, he owned 696 million ImmunityBio shares, which at that time represented an 83% stake. The offering of 33.3 million additional shares last week diluted his stake a bit, but it was still hovering at about 80%.
With the 32% plunge in ImmunityBio’s share price on Dec. 11, Soon-Shiong’s net worth took an immediate hit of about $1 billion. While substantial, that drop in net worth probably isn’t enough to dislodge Soon-Shiong from his top ranking on this year’s Business Journal Wealthiest Angelenos list. When that list was published in October, his net worth was $21.2 billion, well ahead of No. 2 John Tu’s net worth of $15 billion.
