So far Exelixis Inc. (NASDAQ: EXEL) is having a great start to the week. Despite shares taking a dip in Tuesday’s after-hours, the company is still on top near a 52-week high. It appears that Exelixis assumed now would be the best time to dilute following its most recent successful in clinical trial and get more bang for its buck.

The company announced that it plans to offer 20 million shares of its common stock in an underwritten public offering. The underwriters for the offering are Cowen, William Blair, and Stifel.

There will be an overallotment option for underwriters to purchase an additional 3 million shares of common stock in connection with the offering. It’s important to note that all the shares in the offering will be sold by Exelixis.

As far as the news that drove the stock higher this week, Exelixis announced positive top-line results from its primary analysis of METEOR, the Phase 3 pivotal trial comparing cabozantinib to everolimus in 658 patients with metastatic renal cell carcinoma (RCC). These patients have experienced disease progression following treatment with a VEGF receptor tyrosine kinase inhibitor. Cabozantinib reduced the risk of disease progression or death by 42% compared to the everolimus.

Michael M. Morrissey, Ph.D., president and CEO, said:

The positive top-line results from METEOR represent strong progress for the kidney cancer community and for Exelixis, bringing us one step closer to our shared goal of delivering a new and meaningfully differentiated therapeutic option for the many metastatic RCC patients in need. With these data now in hand, Exelixis’ highest corporate priority becomes the submission of U.S. and EU regulatory filings, which we intend to complete in early 2016.

Ultimately this offering will help Exelixis raise more capital to continue developing its pipeline going forward; so it might not be as bad as investors think right now.

Shares of Exelixis closed Tuesday up 2.9% at $6.05 on a 52-week trading range of $1.26 to $6.08. Over 22 million shares moved on Tuesday. However, nearly 74 million shares traded hands on Monday and shares increased 50% to close at $5.88.

Following the announcement shares were down roughly 10% at $5.46 in the after-hours trading session. The stock has a consensus analyst price target of $5.89. Exelixis had a market cap of $1.2 billion as of the close on Tuesday.

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As far as the use of Proceeds, the Exelixis SEC filing said:

Based upon an assumed public offering price of $5.88 per share, we estimate that the net proceeds from the sale of the 20,000,000 shares of common stock we are offering will be approximately $111.3 million, after deducting the estimated underwriting discount and estimated offering expenses payable by us. If the underwriter exercises in full its option to purchase additional shares, we estimate that the net proceeds to us will be approximately $128.0 million.

We will retain broad discretion over the use of the net proceeds from this offering. We currently expect to use the net proceeds from this offering for general corporate purposes, including for clinical trials, research and development, capital expenditures and working capital. We also expect to invest the net proceeds in investment grade, interest-bearing securities.

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