On July 21, Heat Biologics Inc (NASDAQ:HTBX) announced it was carrying out a public offering to raise cash for its two lead candidates’ late stage development. A day later, the company announced it was suspending the offering while it – and to quote – explored alternative options. It’s a strange move, and has the markets questioning motive. It’s also boosted speculation that the company is set for a buyout, or at the very least a big name partnership that will see a cash injection. Both of these scenarios mean upside, making Heat Biologics an attractive near term speculative play.

For those not familiar with the company, here’s a quick primer. It’s North Carolina based dev stage biotech with an oncology focus – specifically, a sub section of immuno-oncology called T-cell immunotherapy. The drugs in this space are designed to recruit a patient’s own immune system to attack cancer cells. It’s been one of the hottest spaces in biotech for the last half decade.

Heat’s offerings in the pace are HS-410 and HS-110. The first targets a type of bladder cancer called non-muscle invasive bladder cancer, and the second is a lung cancer indication. Both are in phase II trials, and have served up some promising data to date. Top line from the bladder cancer drug, which is a potential blockbuster (billion dollar plus revenues) should hit markets during the fourth quarter of this year, and data from the lung cancer indication should follow shortly thereafter.

So what happened with the offering? Well, in short, nobody knows. Nobody outside the company, that is.

“… THE COMPANY HAS SUSPENDED THE PROPOSED PUBLIC OFFERING OF SHARES OF ITS COMMON STOCK PREVIOUSLY ANNOUNCED ON JULY 21, 2016.  HEAT’S LEADERSHIP TEAM DECIDED TO SUSPEND THE PROPOSED PUBLIC OFFERING TO EXPLORE ALTERNATIVE OPTIONS PRESENTED TO THE COMPANY.”

Heat’s got just shy of $12 million cash on hand (at March 31) and it believes that will cover the cost of what it calls “near term milestones” for its two leads. Just what these milestones are is unclear, but it’s likely referring to the phase II wrap ups for both. This means it will need cash for the kicking off of pivotal trials in both indications at some point early to mid next year.

We believe one of two things is going to happen between now and the bladder cancer topline. The first, a big pharma will swoop in and buy Heat at a premium to its current price. The big pharma in question would take the assets and continue development, be it under the guise of Heat or not, and shareholders will receive a premium on their holdings. The second, the company will announce a partnership – one that sees a company cover the remaining development costs and – most likely – inject some cash into Heat’s balance sheet by way of an upfront payment.

The company is at risk of delisting (it fell below the $1 earlier this year) but just got shareholder approval for a reverse stock split, so it looks like this risk will disappear soon. This planned split suggests the later of our two proposed scenarios might be the more likely – why would Heat reverse split just before a buyout?

Either way, we believe the cancellation of the offering is good news for the company. It avoids dilution, and simultaneously suggests a big announcement is just around the corner. With volume on the up, we think this announcement could be a real mover.

We’re going to watch the company closely for any insight into what it plans to do going forward, and where (who?) it plans to get its development capital from ahead of topline from its two leads.

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Disclosure: We have no position in HTBX and have not been compensated for this article.