The end of the week is here, and it’s been a pretty active one in the biotech space. A number of companies have moved on catalysts both fundamental and macro driven, so here’s a look at two of the biggest movers, with an analysis of what’s moving them, and what’s likely to come.

The two companies we’re looking at are Jazz Pharmaceuticals plc (NASDAQ:JAZZ) and FibroGen Inc (NASDAQ:FGEN).

So, first up, Jazz.

This one’s a little convoluted, but stick with us. Jazz picked up a drug called Xyrem back in 2005, when it acquired a company called Orphan Medical. The drug is a sleep condition therapy, with a specific target of narcolepsy – a condition characterized by excessive daytime sleepiness and intermittent, uncontrollable episodes of falling asleep during the day. It’s a big seller for Jazz, but the company has been under considerable pressure over the last couple of years because of the potential for generic competition. A company called Hikma, a generic drugmaker based in the UK, has developed its own version of Xyrem, and Jazz took it to court in an attempt to block the drug from hitting shelves.

The resolution of this litigation is what’s causing the action we’re seeing in the company heading into the close of this week.

The outcome sees Hikma allowed to sell its generic brand, but not until 2023. Further, the company has to give jazz a portion of sales in what amounts to a royalty consideration. The tiered royalties haven’t been made public, but analysts expect double digits, meaning Jazz has gotten a sort of best of both worlds situation out of the litigation. Not only does Hikma have to wait until 2023 to start selling its copy of Xyrem, but the deal means no other company is likely to expend the litigation costs associated with trying to bring another brand to market (at least not before 2024/25, and Jazz stands to gain financially (and potentially substantially) from its sleep asset during a post-patent-expiry period. That’s a rare occurrence in this sector, and it’s one that sees two legally disputing competitors become what amounts to partners basically overnight.

So while the litigation outcome is technically against Jazz in its inference, it’s implications are positive, and it’s a decent outcome. Markets are recognizing this in their response to the news, and Jazz is currently trading at an around 10% premium to its pre-announcement capitalization.

We expect the company to hold on to these gains going forward, and markets to now turn to the company’s development pipeline for catalysts throughout 2017.

So, let’s move on to FibroGen.

Just as with Jazz, this one’s some good news and a bullish run for the company, but for very different reasons. FibroGen just announced that the company has priced a follow on public offering, which will see it raise around $120 million on the back of 5.2 million issue. Anyone familiar with biotech space will be all too aware that a raise like this is generally bad news for shareholders. Sure, it adds cash to the balance sheet, but it also results in dilution. Further, most raises are offered at a discount to the current price per share, in an attempt to persuade the large, institutional investors to pick up big chunks of shares. Dilution, and dilution at a discount, is not good. These sorts of companies need cash, however, and with many generating little to no revenues, equity issue is the only way to fund trials and carry drugs through the costly, and laborious, clinical development pathway.

Well, in this situation, FibroGen has managed to raise the cash at its most recent (before the issue) close price. This is good for a couple of reasons. The first, that it means the dilutive impact on current shareholders, while there, is reduced (technically) because the shares are being issued at full price. The second, and perhaps the more important of the two, is rooted in what it says about larger investors’ perception of the company. If the institutions are willing to pick up large exposures at what amounts to open market pricing, then it suggests that their due diligence (and these are the types of entities that spend huge amounts of money and time performing DD before taking a stake) points towards solid fundamentals and a bright future.

In light of this, FibroGen is trading 15% higher than pre-pricing announcement, and looks good as a runner going forward.