Shares of Seattle-based Omeros, the first true U.S. biotech company to go public in more than 18 months, dropped about 13 percent in the company’s first day of trading.
Omeros (NASDAQ: OMER) opened trading at $10, but tumbled $1.27, or 13 percent, to close its first day at $8.73. The company now has 21.3 million shares outstanding, giving it a market valuation of about $186 million at today’s close of trading.
The company, which has an experimental drug in the final phase of clinical trials to help patients recover from knee surgery, raised a total of $68.2 million through the transaction and will get to take home about $62.1 million after subtracting underwriting discounts and expenses. It’s an important deal not just for Omeros and its shareholders, but for biotech and Washington state. It’s the first IPO for a true biotech company since Sunrise, FL-based Bioheart took the plunge in February 2008 (without counting Nashville’s Cumberland Pharmaceuticals and Research Triangle Park, NC-based Talecris Biotherapeutics, which aren’t traditional VC-backed biopharmaceutical companies). Omeros also represents the first IPO for a Washington state technology company since Kirkland, WA-based Clearwire did it in March 2007.
The deal provides a much-needed capital infusion for Omeros as it heads into the pivotal phase for its lead compound for knee surgery patients, and drug candidates at earlier stages of development for neurological conditions like schizophrenia and Parkinson’s disease. Omeros started the year with $20 million in cash, and burned through about $10.4 million of that in the first six months of the year. The company, founded in 1994, has estimated the new cash ought to provide at least two years’ worth of operating capital.
Besides offering cash to the company for drug development, the deal also provides some liquidity for the company’s investors. Gregory Demopulos, 50, the company’s co-founder, chairman, CEO, president, and chief medical officer, is the largest single shareholder with about an 11.4 percent stake in the company after the close of the IPO, according to a regulatory filing today. Other major holders include Arch Venture Partners (3.5 percent), Aravis Venture (2.3 percent), and the Omeros vice president and general counsel, Marcia Kelbon (1.4 percent), according to the regulatory filing.
Omeros overcame some unusually challenging circumstances in completing this deal. The company is facing a lawsuit from former chief financial officer Richard J. Klein, who accused Omeros of wrongfully terminating him. Klein says he was fired after he filed a whistleblower report on the company in December for filing false time records on grant work performed for the National Institutes of Health. The company, in its legal response, admits it made errors in timekeeping, but says it reported them to the NIH, and never overbilled the government. The company also says the NIH accepted the results of an internal investigation. Klein’s suit is still ongoing in U.S. District Court.
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