Print“Durata succumbed to many of the same problems other therapeutics companies have encountered since 2011 to raise capital through initial public offerings in the United States.”
Durata Therapeutics became the second early-stage therapeutics company to go public in the past month when it priced its initial public offering of 7.5 million shares of common stock at $9 per share on July 19. The offering came in below Durata’s target price range of $11-$13 per share. The Durata IPO follows Tesaro’s $81 million IPO at the end of June. Based on Durata’s pre-IPO registration statement filed on July 9, the company had hoped to raise $81.25 million through the sale of 6,250,000 shares with its IPO, but it managed to raise only $67.5 million. Durata said it intended to use approximately $13 million of the proceeds raised to complete clinical development and seek marketing approval in the United States and Europe for its late-stage experimental intravenous antibiotic, Dalbavancin.
Unlike cancer drug developer Tesaro, which was able to price within its targeted range, Durata succumbed to many of the same problems other therapeutics companies have encountered since 2011 to raise capital through initial public offerings in the United States.
Durata had to offer 25 percent more shares than anticipated to raise 21 percent less than its target amount as it priced well below its target range. That’s the same for nearly all the other 14 therapeutic companies that have gone public since the beginning of 2011.
On average, those 14 companies have raised 12.7 percent less than they had expected while, on average, pricing nearly 20 percent lower than their average target price ranges. Although nearly as many therapeutic companies have had successful IPOs in the United States in 2012 as they did in all of 2011, their IPO performance relative to their stated goals hasn’t looked much better. Drug developers that have gone public in 2012 have raised even less money than their 2011 peers, missing their target fundraising amounts by 14.1 percent.
But despite IPOs being generally more dilutive for these drug developers than they’d like, the post-IPO performance of these companies in 2012 has been impressive. All seven of the 2012 class of U.S. therapeutic IPOs are up for the year, including Durata, which finished its first day of trading on the Nasdaq up .4 percent. On average, this group of companies is up 41.8 percent for the year, led mostly by Supernus, which is up 197 percent since its IPO. In comparison the 2011 therapeutic IPO class were actually down 14.8 percent in 2011, though they have rebounded this year and are up, on average, 36.7 percent.
Perhaps, then, there is reason to believe the public markets are becoming more receptive, or at least entertaining the possibility of investing in healthcare companies again. It’s hard to speculate on the recent positive performance of the IPO class, but the need for new therapies and the ramp up of Big Pharma M&A activity bodes well for the entire sector.
July 20, 2012
http://www.burrillreport.com/article-durata_therapeutics_becomes_second_completed_ipo_in_month.html
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