Endocyte Inc., a developer of drugs for ovarian and lung tumors, rose 29 percent in Nasdaq trading after today’s initial public offering.
The West Lafayette, Indiana-based company gained $1.73 to $7.73 at 4 p.m. New York time in its first day of trading on the Nasdaq Stock Market. Endocyte sold 12.5 million shares at $6 today after reducing the price as much as 60 percent, according to a regulatory filing and data compiled by Bloomberg.
Only half of the 12 IPOs originally scheduled for what would have been the busiest week since 2007 were completed, according to data compiled by Bloomberg. While NeoPhotonics Corp. and Epocrates Inc. rallied more than 20 percent after their offerings, companies from Imperial Holdings LLC to BioHorizons Inc. postponed their sales, the data show. The Egyptian crisis may be causing investors to reconsider some IPOs, said Philip Orlando of Federated Investors Inc.
“Investors are separating the wheat from the chaff and are continuing to remain engaged with the attractive deals in the sectors that they like,” said Orlando, chief equity market strategist at Pittsburgh-based Federated, which manages about $350 billion. “For the ones that they’re nervous about, they’re allowing their concerns about geopolitical risk, particularly Egypt, to cool their ardor.”
Endocyte is in the second of three stages of tests generally needed for U.S. approval for its most advanced drug, called EC145, for ovarian and lung tumors. The drug attaches the vitamin folate to a common chemotherapy to target tumors while avoiding healthy cells.
The company said it plans to use the proceeds from its IPO to fund more tests for EC145 and to advance development of other treatments. Endocyte also is working on drugs for prostate cancer and inflammatory disorders.
Endocyte would employ a 50- to 75-person sales force for EC145 after the drug’s clearance by the U.S. Food and Drug Administration, according to the initial offering plan. The company may seek partners to promote the drug outside the U.S.
The drugmaker said it is developing a lab test to identify patients whose tumors have excessive amounts of folate, making them most likely to benefit from the drug. The vitamin aids cell division, and some tumors overproduce folate as they grow.
The Endocyte offering was arranged by Toronto-based Royal Bank of Canada and Boston-based Leerink Swann & Co. The company had proposed offering 5.35 million shares at $13 to $15 apiece, and then cut the price a second time to 10.7 million shares at $7 before today’s offering.
Meeting the Goal
“The good news and the bad news all in one sentence is that they had to double the number of shares and lower the price to get the same amount of money they had hoped for,” said Steven Burrill, a venture capitalist and biotechnology investor based in San Francisco who said he had a 6 percent stake in the company before the IPO.
“I think the IPO window is open, it’s just selective,” Burrill said today in a telephone interview. “Markets are looking for risk-mitigated companies and those with sales and earnings and somewhat predictable revenue streams are getting a substantially higher premium than those that still have risk clinically or on their pathway to market or on reimbursement.”
BG Medicine Inc., the developer of diagnostic tests, rallied 15 percent in Nasdaq trading after it raised $35 million today. The Waltham, Massachusetts-based company, which first filed for an IPO in 2007, had sought $71.25 million before cutting the price of its offering this week. BG Medicine’s shares gained $1.05 to $8.05 at the 4 p.m. close of trading.
NeoPhotonics, the San Jose, California-based maker of circuits for high-speed communications networks, climbed 20 percent Feb. 2 after raising $82.5 million in its IPO. Epocrates, the San Mateo, California-based provider of medical reference software for mobile phones, surged 37 percent, in the first day of trading after its $85.8 million IPO.