Shares of Xenoport (NASDAQ:XNPT) continues to rise this week off of Monday’s announcement that the company began Phase I testing of its treatment for Relapsing-Remitting Multiple Sclerosis, XP23829. Yesterday the company announced a proposed public stock offering of 6 million shares and today revealed pricing of $6.50 per share, a discount to this morning’s $7.35 open. The company is up 25% since Monday with 15% gains from yesterday’s close alone. Xenoport has two drugs in production and one in Phase III testing. With large R&D expenses the company has not turned a profit in some years.
Investors are likely pushing shares higher post-dilution today but we may see a sharp sell-off as traders take profits soon. Investors may have been expecting a larger stock offering, more dilution and saw the relatively small offering as a positive sign.