July 28--Drug developer Mapi Pharma, which was scheduled to complete a $37 million financing round at the end of last week, published a revised prospectus on Friday for raising only $20 million (including underwriters' options). The company value for the IPO was accordingly lowered to $120 million, after money.
Underwriter Aegis Capital is leading the IPO, with Chardan Capital as the secondary underwriter. The revised IPO is expected to take place this week, probably late in the week. The need to reduce the volume and value of the offering is apparently mainly linked to the fact that the company is not in one of Wall Street's hot areas, and not necessarily because it is an Israeli company during a security-political crisis. Mapi Pharma is not bringing a great dream to its offering, while on the other hand, it does not present a well-oiled generic operation with reliable revenue and profits.
The company, headed by CEO Ehud Marom, manufactures complicated-to-produce raw materials for generic drugs, and possesses a technological platform for delayed drug release. Mapi Pharma is seeking to use this platform to produce delayed release versions of Copaxone (made by Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA)) and a pain reliever.
Mapi Pharma combines the risk of a startup with the limited dream of a generic company. The fact that the company is planning to locate at least some of its plants in Israel is only a minor element in the challenge it faces in its IPO.
Even if Mapi Pharma raises only $20 million on Nasdaq, it will still be an impressive achievement. The company tried to register itself for trading on the Tel Aviv Stock Exchange (TASE) in similar conditions, but was unsuccessful, and had only $2.3 million in the bank at the end of 2013.
Despite the prospectuses by biotech companies (not only Israeli ones) flooding Nasdaq , it appears that the enthusiasm for these offerings has subsided somewhat, compared with the first four months of 2014. Mapi Pharma was not the only one having a tough time last week; US company Atara also postponed its issue, and two other companies held their IPOs at the minimum price, while two more held their issue at below the minimum price.
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