The "d' word -- dilution -- gives biotech investors cold sweats at night. It can strike with little warning, leaving investors with devalued shares.
Dilution is always better if avoided entirely, but it is a key source of funding for development-stage drug companies. For biotechs planning secondary offerings to raise capital, a good role model would be Clovis Oncology. Shares were down about 2% today, but investors at the beginning of the year are still enjoying a healthy four-bagger.
In this video, health-care analyst David Williamson discusses the offering in further detail and why the market made Clovis one of 2013's top performers.
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The article The Best Kind of Biotech Dilution originally appeared on Fool.com.David Williamson owns shares of Pfizer. The Motley Fool recommends BioMarin Pharmaceutical. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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