Shares of San Diego-based Zogenix (NASDAQ: ZGNX) slid to $3.98 a share in the first day of trading today, after the drug-and-device startup substantially revised the terms of its initial public offering, raising less than anticipated.
The specialty pharmaceutical company, which launched its Sumavel DosePro, a needle-free injectable migraine treatment in January, raised a total of $56 million by offering 14 million shares at $4 a share. The company initially planned to raise close to $90 million by offering 6 million shares. The company later priced its shares between $12 and $14 a share.
Since it was founded in 2006, Zogenix has raised about $200 million from venture capital investors and debt financing. The biotech startup, which I profiled in August, has also been developing compounds for treating pain and central nervous system disorders, and plans to pair each new drug with its proprietary “DosePro” device. It was the second try for an IPO for Zogenix, which withdrew an effort to go public two years ago.
The stock offering raised a third less capital than the company intended, and the share price amounted to a 67 percent discount from the low end of the price range that Zogenix disclosed earlier this month. The results were eerily similar to the IPO outcome of another San Diego biotech—Trius Therapeutics slashed its offering by 62 percent in the final hours before its Aug. 3 IPO.
“These are just harder and harder to sell,” John McCamant, editor of the Medical Technology Stock Letter told The San Diego Union-Tribune today. “Every IPO seems to be getting a haircut because the others have gotten hair cuts.”