Feb. 07--Shares of Argos Therapeutics began trading on the Nasdaq Friday morning, but the drug-development company had to accept a significantly lower price for its stock in order to complete its initial public offering.
Durham-based Argos announced Thursday evening that it priced its IPO shares at $8 each, well below the $13-to-$15 per share it had targeted.
The company's shares began trading at $8.90 shortly before 10:30 a.m. and rose as high as $9.36 in early trading.
John Fitzgibbon Jr., who tracks new stock offerings for website IPOScoop.com, said of Argos going public at a lower price than it wanted: "The IPO market is a lot like Macy's department store. If they put the merchandise on sale and it doesn't sell, they mark it down."
Fitzgibbon said there has been a wave of biotechnology companies seeking to go public recently, and this week the market "turned rocky" and more selective.
Of the bumper crop of seven biotech IPOs that priced this week, two companies -- including Argos -- ended up accepting less than their target price in order to go public, Fitzgibbon said.
Argos is one of two Triangle biotech companies that were expected to price its IPO shares Thursday evening. But the second, Research Triangle Park-based NephroGenex, has delayed its pricing.
"I'm told by their syndicate they expect to price Monday night and to trade Tuesday," Fitzgibbon said.
The company notified the Securities and Exchange Commission that the company's largest shareholder, New Jersey venture capital firm Care Capital, has agreed to purchase an additional $10.4 million worth of shares at its IPO price. That would push Care Capital's ownership stake to 48.7 percent post-IPO.
"They have to refile," Fitzgibbon said. "It is pertinent information."
The company's SEC filing notes that "Care Capital will exert significant influence over us and any action requiring the approval of the holders of our common stock." That makes it "less likely that any other holder of common stock or directors of our business will be likely to affect the way we are managed and could delay or prevent an acquisition of us on terms that other stockholders may desire."
Two of NephroGenex's six-person board of directors are Care Capital partners, including Richard J. Markham, who has been chairman since October. Markham is the former vice chairman and chief operating officer of pharmaceutical giant Aventis.
In conjunction with its pricing, Argos also sold significantly more shares than it had intended -- 5.625 shares, rather than the 4.25 million shares it had planned, according to the company's securities filings.
Even with the sale of additional shares, the company is raising significantly less money.
The company grossed $45 million from the stock sale, which doesn't account for millions of dollars of underwriting fees and expenses stemming from the IPO. If it had been able to go out at $14 per share -- the midpoint of its target price -- it would have received gross proceeds of $59.5 million while selling fewer shares.
The underwriters have a 30-day option to purchase up to 843,750 additional shares of Argos stock at the IPO price.
(c)2014 The News & Observer (Raleigh, N.C.)
Visit The News & Observer (Raleigh, N.C.) at www.newsobserver.com
Distributed by MCT Information Services