There is still a bearish market for biotech IPOs, but Palo Alto, CA-based Anacor Pharmaceuticals is the latest company to show that it was willing to plow ahead and accept that sentiment.
Anacor (NASDAQ: ANAC) said today it agreed to sell 12 million shares at $5 apiece, raising a total of $60 million through its initial public offering. Those terms are far lower than what the company had originally been shooting for—an offering worth as much as $97 million. The deal was forecasted to command an initial share price of $16 to $18 for 4.7 million shares as recently as Nov. 12, according to an amended investor prospectus. The latest IPO filing says Venrock Associates chose to invest $10 million in Anacor through a private placement.
This offering is yet another sign of tepid interest from the public markets in new biotech IPOs. Just in the last few weeks, we have written about how Clinton, NJ-based Ikaria withdrew its offering, and both Mountain View, CA-based Complete Genomics (NASDAQ: GNOM) and San Diego-based Zogenix (NASDAQ: ZGNX) settled for much lower prices than they had projected.
Anacor pitched itself to investors as a lean-and-mean drug discovery shop. It said in its filings that it used a boron-based chemistry platform to put five drug candidates into clinical trials, on a relatively light investment of $88.3 million over the past eight years. The company has partnerships with drug giants GlaxoSmithKline and Eli Lilly. It says it has three lead compounds in development—two of which are topically administered dermatology drugs, while a third is an antibiotic that circulates through the bloodstream to fight Gram-negative bacteria. The most advanced compound in development, an anti-fungal called AN2690, is slated to enter Phase III clinical trials before the end of the year.
The biggest shareholders in Anacor include Rho Ventures (21.1 percent ownership); Venrock Associates (17.4 percent); GlaxoSmithKline (10.4 percent); and Aberdare Ventures (6.6 percent), according to the latest SEC filing. The deal was underwritten by Citi, Deutsche Bank Securities, Cowen & Co., and Wedbush PacGrow Life Sciences.
The IPO shares of Anacor were apparently priced right in synch with what the market thinks they are worth. The stock, in its first day of trading today, climbed by one penny to $5.01 at 12:26 pm Eastern time.