Erasca Announces Pricing of Underwritten Offering of Common Stock

Rhea-AI Summary

Erasca, a clinical-stage precision oncology company focused on RAS/MAPK pathway-driven cancers, announced the pricing of an underwritten offering of 86,486,486 shares of its common stock at $1.85 per share.

The offering is expected to raise approximately $160 million before underwriting discounts and expenses. Erasca has also granted underwriters a 30-day option to purchase an additional 12,972,972 shares.

The offering is anticipated to close on May 21, 2024, subject to customary closing conditions. J.P. Morgan and BofA Securities are the joint book-running managers.

Proceeds will fund research and development, as well as general corporate purposes. The offering is made under a shelf registration statement effective August 18, 2022.

Positive

• Erasca expects to raise approximately $160 million from the offering.
• Proceeds will fund research and development of product candidates.
• J.P. Morgan and BofA Securities are acting as joint book-running managers, indicating strong institutional backing.
• Additional 12,972,972 shares may be purchased by underwriters, showing potential for further capital.

Negative

• The offering price of $1.85 per share may indicate undervaluation in the market.
• Potential shareholder dilution due to the issuance of 86,486,486 new shares.
• Additional 12,972,972 shares could further dilute existing shareholders' equity.
• Expenses from underwriting discounts and offering costs will reduce the net proceeds.

Financial Analyst

The underwriting of 86,486,486 shares at $1.85 per share will generate approximately $160 million before expenses and commissions. This significant capital raise is a vital move for Erasca, providing them with a substantial cash inflow to continue financing their R&D activities and other corporate functions. Such offerings often result in share dilution, which might not be favorable for current investors in the short term. However, considering the long-term perspective, the capital raised is important for the advancement of their oncology pipeline targeting the RAS/MAPK pathway.

Furthermore, the engagement of reputable book-running managers like J.P. Morgan and BofA Securities adds a layer of credibility to the offering, potentially solidifying investor confidence. Retail investors need to weigh the immediate dilution against the strategic necessity of this capital infusion for future growth and product development.

Market Research Analyst

In the biotech sector, particularly in companies like Erasca focused on oncology, continuous funding is essential due to the high costs associated with clinical trials and regulatory approvals. This move indicates a strategic alignment with their growth trajectory and market expectations. The option for underwriters to purchase an additional 12,972,972 shares suggests strong demand and confidence from institutional investors, which can be a positive signal for retail investors.

However, it's important to monitor how these funds will be allocated and the milestones Erasca aims to achieve. Effective utilization of these proceeds can significantly impact the company's valuation and market performance. Retail investors should stay informed about the company’s progress in clinical trials and any potential partnerships or collaborations that could arise from this capital boost.

Legal Expert

From a regulatory perspective, Erasca’s filing of a shelf registration statement on Form S-3 with the SEC and the subsequent effective declaration in August 2022 positions the company well for streamlined capital raising activities. This legal framework facilitates timely offerings and provides transparency for investors through the prospectus and supplement filings, ensuring compliance with securities laws.

Such offerings under a shelf registration allow the company to access capital markets more efficiently, which can be advantageous in responding to market conditions or funding needs. Retail investors should view this as a positive regulatory adherence, reflecting Erasca’s preparedness and alignment with legal protocols, enhancing trust and market stability.

SAN DIEGO, May 16, 2024 (GLOBE NEWSWIRE) -- Erasca, Inc. (Nasdaq: ERAS), a clinical-stage precision oncology company singularly focused on discovering, developing, and commercializing therapies for patients with RAS/MAPK pathway-driven cancers, today announced the pricing of an underwritten offering of 86,486,486 shares of its common stock at a price of $1.85 per share. All of the shares to be sold in the offering are to be sold by Erasca. The gross proceeds to Erasca from the offering, before deducting the underwriting discounts and commissions and other offering expenses, are expected to be approximately $160 million. In addition, Erasca has granted the underwriters a 30-day option to purchase up to an additional 12,972,972 shares of common stock at the offering price. The offering is expected to close on May 21, 2024, subject to the satisfaction of customary closing conditions.

Erasca intends to use the net proceeds from this offering, together with its existing cash, cash equivalents and marketable securities, to fund the research and development of its product candidates and other development programs and for working capital and other general corporate purposes.

J.P. Morgan and BofA Securities are acting as joint book-running managers for the offering.

The securities described above are being offered by Erasca pursuant to a shelf registration statement on Form S-3, including a base prospectus, that was previously filed with the Securities and Exchange Commission (SEC) and was declared effective on August 18, 2022. A prospectus supplement and accompanying prospectus relating to this offering will be filed with the SEC. When available, copies of the prospectus supplement and the accompanying prospectus relating to this offering may be obtained from: J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717 or by email at prospectus-eq_fi@jpmchase.com and postsalemanualrequests@broadridge.com; or BofA Securities, NC1-022-02-25 Attention: Prospectus Department, 201 North Tryon Street, Charlotte, NC, 28255-0001, or by email at dg.prospectus_requests@bofa.com. Electronic copies of the prospectus supplement and accompanying prospectus will also be available on the website of the SEC at http://www.sec.gov.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction.

About Erasca
At Erasca, our name is our mission: To erase cancer. We are a clinical-stage precision oncology company singularly focused on discovering, developing, and commercializing therapies for patients with RAS/MAPK pathway-driven cancers. Our company was co-founded by leading pioneers in precision oncology and RAS targeting to create novel therapies and combination regimens designed to comprehensively shut down the RAS/MAPK pathway for the treatment of patients with cancer. We have assembled one of the deepest RAS/MAPK pathway-focused pipeline in the industry. We believe our team’s capabilities and experience, further guided by our scientific advisory board which includes the world’s leading experts in the RAS/MAPK pathway, uniquely position us to achieve our bold mission of erasing cancer.

Forward Looking Statements
Erasca cautions you that statements contained in this press release regarding matters that are not historical facts are forward-looking statements. The forward-looking statements are based on our current beliefs and expectations and include, but are not limited to: our expectations regarding the expected closing of the offering and the anticipated use of proceeds therefrom. Actual results may differ from those set forth in this press release due to the risks and uncertainties associated with market conditions and the satisfaction of customary closing conditions related to the offering, as well as risks and uncertainties inherent in our business described in our prior filings with the SEC, including under the heading “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2023, and any subsequent filings with the SEC. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and we undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement, which is made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Contact:

Joyce Allaire
LifeSci Advisors, LLC
jallaire@lifesciadvisors.com

Source: Erasca, Inc.

FAQ

What is the stock symbol for Erasca?

The stock symbol for Erasca is ERAS.

How many shares is Erasca offering in the underwritten offering?

Erasca is offering 86,486,486 shares of common stock.

What is the price of each share in Erasca's offering?

Each share is priced at $1.85 in Erasca's offering.

How much does Erasca expect to raise from the offering?

Erasca expects to raise approximately $160 million before expenses.

When is the expected closing date for Erasca's offering?

The offering is expected to close on May 21, 2024.

Who are the joint book-running managers for Erasca's offering?

J.P. Morgan and BofA Securities are the joint book-running managers.

What will Erasca use the proceeds from the offering for?

Erasca intends to use the proceeds for research and development and general corporate purposes.

What is the additional option granted to underwriters in Erasca's offering?

Underwriters have a 30-day option to purchase an additional 12,972,972 shares.