Durham antiviral drug developer Chimerix raised more than $102 million in a public stock sale Thursday as Wall Street investors wagered on the blockbuster potential of the company’s experimental drugs.
Chimerix investors were rewarded with a 34 percent profit as the stock gained throughout the day. Many more investors, including the company’s own officers, were turned away from the initial stock offer after the company decided it had raised all the cash it needed.
The 13-year-old company, which doesn’t have a prescription drug on the market, sold 7.3 million shares. That’s only a fraction that could have been sold to every interested investor, said Chimerix board member and investor Art Pappas, who owns 5.2 percent of the company.
“This deal had so much demand we ultimately asked the insiders to give up their shares to let others come in,” said Pappas, managing partner of Pappas Ventures in Durham. “It was oversubscribed at four times what we were trying to raise.”
It was the second successful public stock offering for a Triangle company so far this year – both of them in the medical field. Raleigh medical diagnostics company LipoScience went public at the end of January, selling 5 million shares at $9 apiece.
On Thursday another Triangle company, ChannelAdvisor filed papers with the Securities and Exchange Commission indicating it hoped to raise as much as $86 million through a public offering. The Morrisville e-commerce company joins Quintiles International in the IPO queue. The Durham pharmaceutical services company wants to raise $600 million.
At $14 a share for Chimerix’s initial offer, Wall Street investors valued the stock in line with the company’s own prediction that it would initially sell shares for $13 to $15. By the end of the day, the shares closed at $18.79, up $4.79 a share.
“That’s a good day’s work for the investors,” said Jim Verdonik, a securities lawyer in Raleigh. “They’re going home and will be nicer to the kids tonight and pet their dog a little nicer.”
Chimerix expects to net about $95 million from the stock sale after paying banking fees and commissions. The 46-employee company will use the money for research and development, debt payments and general operations.
Chimerix is developing a treatment for life-threatening viral infections in patients whose immune systems have been compromised by cancer or by drugs. Its most advanced experimental drug, CMX001, has gone through two patient trials and is expected to go through a third and final test this year.
Three trials are required before Chimerix can seek regulatory approval to sell the product to hospitals, doctors and patients.
Chimerix has spent $123 million on research and development of novel medications. Most of the money has come from government research grants and from private investors, such as Pappas Ventures.
Chimerix is also developing an experimental HIV treatment, CMX157. Last summer Merck licensed the rights to the product for a $17.5 million upfront payment plus milestone payments that could reach $151 million. Merck will be responsible for developing and marketing the drug.
John Fitzgibbon Jr., who tracks new stock offerings for IPOScoop.com, said drug development companies with such licensing deals tend to perform better on their first day of trading.
“We’ve noticed that when the pharmaceutical companies or biotech companies go public with collaboration and licensing revenues they generally do well the first day out,” he said. “ ... Those that don’t flop.”
Thursday’s stock offering was handled by Morgan Stanley and Cowen & Co., both marquee names on Wall Street. Verdonik said that in the world of stock investing, citing those brokerages would give many investors the assurance they are spending their money wisely.
“The underwriters are telling the world: We think this is different than all those other biopharmas that have no product,” Verdonik said.
Staff writer David Bracken contributed.