Karyopharm IPO success part of the biotech boom
The decision to take a company public isn’t an easy one, said Paul Brannelly, senior vice president of finance and administration at Karyopharm Therapeutics in Natick. The money and time spent on activities related to public trading are considerable, according to Brannelly. Being public somewhat limits executives’ ability to make quick business decisions.
But Karyopharm, a clinical-stage drug company that is developing treatments for solid tumors as well as cancers of the blood, saw pursuing an initial public offering (IPO) this fall as an opportunity to shore up financing as it continues the lengthy clinical trial process that it hopes will lead to approval from the U.S. Food and Drug Administration (FDA).
IPO proceeds "very significant"
It was a risk worth taking. Karyopharm increased the number of shares it was offering on the NASDAQ, from a planned sale of 5.7 million share to 6.8 million in November, and then selling another 1.02 million in December. The company priced its stock at $16, at the high end of its projected $14 t- to $16 -million range. All told, the company netted $125 million in the IPO.
Brannelly called the proceeds “very significant,” estimating that a typical IPO generates about half that amount.
“So this gives us a lot more runway to do a better job on clinical trials and move forward,” Brannelly said.
Buoyed by market conditions and results
Brannelly attributed the successful IPO to both external and internal factors. The biotechnology industry flourished in 2013, with more than 30 successful IPOs launched as of mid-December, according to the industry publication Fierce Biotech. That’s up from just 11 in 2012, according to Forbes magazine, and it was the best year for successful IPOs since 2000.
Brannelly said market conditions have improved as the FDA has been “more reasonable” about granting drug approvals, which investors view favorably. Meanwhile, Karyopharm has generated several months’ worth of clinical data, dating back to June 2012.
“We had interesting clinical data that made people sort of perk up and pay attention to Karyopharm a little bit more,” Brannelly said.
Karyopharm is the only biotech company Brannelly is aware of that’s developing a cancer drug that works by keeping cancer-suppressing proteins inside the cell nucleus, where they need to be to do their job. Cancer essentially kicks those proteins out, Brannelly explained.
Federal JOB Act also at work
Another turn of events allowed Karyopharm to maximize the potential to attract investors. The federal JOBS Act of 2012, designed to make it easier for new businesses to raise startup funds, now allows companies to conduct “test the water” meetings with investors before more formal interviews during IPO road shows, during which investors decide whether or not to give a company money. This allowed Karyopharm to present clinical results early and helped the company gauge whether going public was a good idea, Brannelly said.
Image source: Freedigitalphotos.net
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