Durham's Chimerix could go public as early as next week

dranii@newsobserver.comApril 2, 2013 

Durham drug-development company Chimerix, which could go public as early as next week, is anticipating that Wall Street will value the business at more than $300 million.

Chimerix filed a registration statement early last month with the Securities and Exchange Commission disclosing its plans for an initial public offering. The company followed up with a filing on Monday that filled in some crucial blanks – notably, the price per share it is targeting and how many total shares outstanding it would have after an IPO.

According to the new filing, Chimerix, which doesn’t yet have a prescription drug that’s been approved for sale to the public, intends to sell 6.1 million shares of stock at between $13 and $15 per share in its IPO. That would give the company nearly 23.2 million shares outstanding – putting its market capitalization, or total value of its outstanding shares, at between $301.5 million and $347.9 million if it achieves its price target.

The filing is an expression of confidence that the company will manage to go public, said John Fitzgibbon Jr., who tracks new stock offerings for IPOScoop.com.

“It looks to me like they feel they do have a strong enough demand to bring it public,” he said.

IPOScoop.com anticipates, based on information obtained from the underwriters, that Chimerix will price its shares after the market closes on Wednesday, April 10. That would mean that shares would start trading the following day.

It remains to be seen whether Chimerix shares will hit the company’s price target or if the company will end up lowering its price in order to stimulate demand.

Chimerix, which was incorporated in 2000 and has 46 employees, has spent $123 million on research and development of innovative medicines. Its most advanced experimental drug is CMX001, a treatment for life-threatening viral infections in patients whose immune systems have been compromised by cancer or drugs. Chimerix expects to enroll patients in a third phase trial, the final phase required before seeking regulatory approval, later this year.

Shares for millions

If Chimerix goes public at $14 a share – the midpoint of its target price – it expects to generate net proceeds of $77.6 million after fees and expenses. The company plans to use that money, first and foremost, for research and development related to CMX001.

Chimerix has been sustained up till now by government grants and $101 million raised from private investors, including Durham-based Pappas Ventures. Pappas would own a 5.4 percent take in the company after an IPO, which would be worth $15.6 million if Chimerix goes public at $14 a share.

If Chimerix succeeds in going public next week, its path from publicly disclosing its IPO plans to going public would be less than five weeks. Such a short period would have been unthinkable under the traditional rules, but Chimerix is benefiting from a bill that was signed into law by President Barack Obama last year.

The company qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act, or JOBS Act. The JOBS Act permits emerging companies – defined as companies with less than $1 billion in revenue – to start the IPO ball rolling by filing a “confidential” draft registration statement that the SEC can review.

“You can stay confidential as long as you want,” said Don Reynolds, a securities lawyer with Raleigh’s Wyrick Robbins Yates & Ponton. “But you can’t go on a road show until 21 days after you file publicly.”

Privacy before pitch

The road show is a crucial part of the IPO process where top company executives make their sales pitch to institutional investors – mutual funds, pension funds and other large money managers.

So when Chimerix filed its registration statement on March 8, it already was well into the IPO process, having filed a confidential draft statement on January 30. That confidential statement was publicly disclosed on March 8 as well.

Filing a confidential draft document enables companies to “get a better sense if the market is going to be welcoming” to their IPO aspirations without disclosing their intentions publicly, Reynolds said. That would permit a company to pull the plug on an IPO if the market isn’t favorable or if a buyer emerges for the business without ever having to release the detailed financial information a registration statement entails.

“Your competitor never sees your information, and the next-door neighbor of the CEO never know how much he or she makes,” Reynolds said.

Ranii: 919-829-4877

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