What dilution impact will the upsized offering and the underwriters' 30‑day option have on existing shareholders' ownership percentages?
Dilution math
- Upsized offering: 9,803,921 new shares
- Underwriters’ 30‑day option: up to 1,470,588 additional shares
If the option is fully exercised, the total “new‑issue” size could be 11,274,509 shares.
When a company issues new stock, each existing shareholder’s ownership percentage is reduced by:
[
\text{Dilution %} = \frac{\text{New shares}}{\text{Pre‑offering shares} + \text{New shares}}
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Mineralys has not disclosed its current “pre‑offering” share count in the release, but the typical outstanding share base for a small‑cap, clinical‑stage biotech listed on Nasdaq is in the 30 – 35 million range. Using a midpoint of 32 million shares:
| Scenario | New shares | Total post‑issue shares | Approx. dilution to existing holders |
|---|---|---|---|
| Base offering only | 9,803,921 | 41,803,921 | ≈23.4 % of pre‑offering ownership |
| Full option exercised | 11,274,509 | 43,274,509 | ≈26.1 % of pre‑offering ownership |
Thus, existing shareholders can expect a ~23 % to 26 % reduction in their proportional stake, depending on whether the underwriters fully exercise the option.
Trading implications
- Short‑term price pressure: The issuance of ~11 m shares at $25.50 will add a sizable supply to the market, likely capping upside and creating modest downside pressure on the price until the new equity is absorbed.
- Fundamentally positive catalyst: The $250 m net proceeds are earmarked for R&D and pipeline expansion (HTN, CKD, OSA). If the market views the capital‑raise as adequately funding near‑term value‑creating milestones, the price may stabilize after the initial dilution shock.
3 Actionable play: Consider a small‑size, short‑duration sell‑or‑hold on any long‑positions to capture the anticipated dip, especially if technicals (e.g., a break of the 20‑day SMA or a bearish MACD crossover) confirm the downside. For bullish investors, a buy‑the‑dip if the price settles near the $25‑$26 region and the company’s upcoming data releases (e.g., Phase 2 read‑outs) justify the long‑term upside.
Overall, the upside of the capital raise must be weighed against a ~25 % dilution of existing shareholders’ stakes—an impact that will be front‑loaded into the share‑price narrative over the next few weeks.