By Kathryn Hardison

Shares of Erasca Inc. declined roughly 30% to $5 Friday after the clinical-stage precision oncology company priced a $100 million underwritten public offering and announced a license agreement with Novartis AG.

Shares reached an intraday low of $4.70, a level last seen June 20 when shares reached $4.56, according to FactSet. For the year, shares traded 68% lower.

The company said Friday that it would price roughly 15.4 million shares at $6.50 each in the underwritten public offering, which is expected to close Tuesday. The gross proceeds, before deducting expenses, are expected to be about $100 million, Erasca said.

Erasca said it intends to use the net proceeds, together with its existing cash, cash equivalents and marketable securities, to fund the research and development of its product candidates and other development programs. Proceeds also will be used for working capital and other general corporate purposes.

J.P. Morgan and Goldman Sachs & Co. are acting as joint book-running managers for the offering, Erasca said.

Also Friday, Erasca said it has entered into an exclusive license agreement with Novartis for naporafenib, a Phase 2 pivotal-ready pan-RAF inhibitor. The company said naporafenib has a potential first-in-class and best-in-class profile in NRAS mutant melanoma and other RAS/MAPK pathway-driven tumors.

In exchange for the worldwide license to develop and commercialize naporafenib, Erasca will pay Novartis a one-time cash payment of $20 million and $80 million of shares priced at $6.50 each, it said.

Novartis also is eligible to receive up to $80 million in cash based on regulatory milestones covering two indications in the U.S., Europe and Japan. It also stands to receive up to $200 million in cash, based on sales milestones.

Write to Kathryn Hardison at kathryn.hardison@wsj.com

(END) Dow Jones Newswires

December 09, 2022 13:00 ET (18:00 GMT)

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