Sierra Oncology to offer convertible preferred stock, warrants

By Rebecca Melvin

New York, Nov. 6 – Sierra Oncology Inc. announced on Wednesday plans to sell series A convertible preferred stock, together with series A and B warrants.

The company’s common stock plunged 25% in after-hours trade when the announcement was made.

The proceeds will be used to fund the company’s planned Phase 3 clinical trial of momelotinib and for general corporate purposes.

Jefferies is acting as the bookrunning manager for the offering.

Each preferred will be initially convertible into that number of shares of common stock equal to the purchase price of the series A preferreds divided by the conversion price of the preferreds.

Each share will be convertible automatically on the fifth day of trading following the announcement of stockholder approval of the first reverse stock split following the offering.

Each share of series A preferred stock will be accompanied by a series A warrant to purchase shares of common stock – equal to 100% of warrant coverage – and a series B warrant to purchase shares of common stock that will equate to 33% warrant coverage.

The series A warrants will expire five years from the date they first become exercisable, and the series B warrants will expire 75 days after the announcement of top-line date from Sierra Oncology's planned Phase 3 clinical trial of momelotinib.

The late-stage drug development company is based in Vancouver, B.C.

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