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Ayala Pharmaceuticals To Raise $25M Via Private Stock Placement; Shares Pop 16%

Ayala Pharmaceuticals has secured $25 million in strategic financing through a private placement of its shares to institutional investors, including Redmile Group and SIO Capital Management. Shares of AYLA jumped 16% and closed at $21 on Feb. 19.

As part of the financing agreement, the clinical-stage oncology company will sell 1.6 million units at a price of $15 per unit where each unit will consist of one share of the company’s common stock and a warrant to purchase 0.35 of the company’s share at an exercise price of $18.10.

The private placement is expected to close by Feb. 23. AYLA said that the proceeds from this financing will help fund its operating expenses and capex through 2023.

Ayala’s CEO (AYLA) Roni Mamluk commented, “We are very excited to have obtained additional funding enabling us to execute on our strategic priorities and support business growth from high quality US healthcare dedicated funds, which we also expect will extend our cash runway into 2023. Ayala is well capitalized as we approach several key milestones planned for the remainder of 2021.”

Furthermore, Mamluk added, “We look forward to initiating our pivotal Phase 2/3 study of AL102 for the treatment of desmoid tumors in the first half of this year and presenting data from our Phase 2 study of AL101 for the treatment of recurrent/metastatic adenoid cystic carcinoma and triple negative breast cancer later this year.”

Ayala specified that one of the institutional investors had opted for pre-funded warrants instead of common stock. The warrants would be exercisable at any time from the closing date of the private placement and through the third year after the closing date. (See Ayala stock analysis on TipRanks)

Last week, Oppenheimer analyst Jay Olson reiterated a Buy rating and a price target of $27 on the stock, citing “the company’s targeted therapies for cancers in which Notch activation is a known tumor driver.”

“AYLA’s drug candidates AL101 and AL102, are potent gamma-secretase inhibitors that target aberrant activation of Notch signaling in cancer cells,” Olson wrote in a note to investors. “We believe Notch targeted therapies should address the underlying drivers in these cancers and improve clinical outcomes for patients with  limited treatment options.”

Overall, analysts are bullish about the stock with a Strong Buy consensus rating. That’s based on 4 analysts recommending a Buy. The average analyst price target of $25.33 implies 20.6% upside potential to current levels.

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