NEW YORK – Guardant Health said Thursday that it has entered into a common stock purchase agreement with Baillie Gifford for the sale of 3,387,446 shares of its common stock in a registered direct offering at $26.77 per share. The gross proceeds will total approximately $90.7 million before expenses.
The net proceeds will support general corporate purposes including working capital, operating expenses, and capital expenditures, Guardant said.
The announcement follows a day after Guardant disclosed that the US Food and Drug Administration's molecular and clinical genetics panel of the medical devices advisory committee is tentatively scheduled to review the premarket approval application for its colorectal cancer screening test on March 28 of next year. That news resulted in a drop in Guardant's share price.
Dan Leonard from Investment Bank UBS wrote in a report to investors that questions the FDA might raise in the advisory meeting include the lower early-stage cancer and precancer sensitivity that Guardant has reported for its test compared to Exact Sciences' stool-based test Cologuard, as well as questions around labeling in regard to the indications for the test among other screening options.
In another note to investors, BTIG's Mark Massaro wrote that his firm viewed the stock drop following this news as an overreaction. "We've fielded various questions and heard some bizarre (and conflated) thoughts from investors, and we recommend investors buy shares of GH on the weakness. We have previously stated that GH is underappreciated and (perhaps) misunderstood, and we think recent trading in the name affirms our thinking," Massaro wrote.
He added that he views the call for an advisory meeting for the Guardant CRC screening test as unsurprising considering its position as a first-of-its kind blood-based assay, especially considering that previous tests for the same intended use were also subject to FDA advisory panel meetings.