Quintiles got off to a nice start in its stock market debut Thursday as the pharmaceutical services giant’s shares closed 5 percent higher.
Quintiles stock, which now trades on the New York Stock Exchange under the ticker symbol “Q,” closed at $42.11, up $2.11. Earlier in the day, shares traded above $44.
Strong demand prompted Quintiles and its private shareholders, including founder and Executive Chairman Dennis Gillings and four private equity firms, to sell about 23.7 million shares, or about 1 million shares more than planned. The company itself actually sold about 700,000 fewer shares.
“We are obviously pleased with the reception to Quintiles as a public company,” John Ratliff, president and chief operating officer, said in a phone interview.
Ratliff was part of a contingent of Quintiles employees – including Gillings, CEO Thomas Pike and Kevin Gordon, chief financial officer – who visited the floor of the New York Stock Exchange on Thursday morning to witness the onset of trading in the stock. They also are set to participate in the opening-bell ceremony Friday morning, which is when the company had anticipated making its stock market debut. The timetable was accelerated 24 hours thanks to robust investor demand.
The Durham-based company priced its shares at $40 Wednesday evening, at the top of its target range of $36 to $40.
The IPO raised nearly $950 million, with about 45 percent of the proceeds going to the major shareholders. Quintiles netted $489.8 million after fees and expenses. It plans to use $306 million of the proceeds to pay down its more than $2 billion in debt.
“It’s a really big deal – no pun intended there,” Ratliff said.
Quintiles was founded in 1982 and previously was publicly traded from 1994 until 2003, when Gillings – a former biostatistics professor at UNC-Chapel Hill – led a $1.7 billion leveraged buyout that took the business private.
The company was valued at about $3.8 billion in 2008 when one of its large investors cashed in its stake and new investors were brought in, according to Bloomberg News. With Thursday’s closing price, Wall Street valued Quintiles at $5.43 billion.
Quintiles revenue rose 12.1 percent to $3.7 billion last year, making it the world’s largest contract research organization, or CRO. It helps pharmaceutical and biotechnology companies test experimental drugs, and also assists those companies with selling and marketing prescription medicines once they win regulatory approval.
Ken Atkins, executive director of Wake County Economic Development, said that Quintiles’ new status as a publicly traded company will be a plus when recruiting large corporations to the area. Other publicly traded companies “like to see there are other large Wall Street companies here as well,” Atkins said. “It speaks to the sophistication and size of your market.”
Moreover, Quintiles – with 27,000 employees worldwide, including more than 2,000 in the Triangle – isn’t just another public company.
“That’s a bellwether” company, said Clay Thorp, a venture capitalist at Durham’s Hatteras Venture Partners. “It’s the market leader in its industry sector.”
It’s turning out to be a strong year for successful IPOs by Triangle-based companies.
Quintiles is the third, and by far the largest, local company to go public this year, following on the heels of medical diagnostics company LipoScience and drug development company Chimerix.
Thorp said it speaks well of the Triangle that IPO-worthy companies are being grown locally.
“I think that brings a lot more notoriety to the Triangle,” Thorp said.
Additional notoriety could be on the way.
More IPOs coming
Three other Triangle companies have filed plans to go public: Ply Gem Holdings, a maker of vinyl siding that generated $1.12 billion in revenue last year; ChannelAdvisor, a fast-growing e-commerce technology company that generated $53.6 million in revenue last year; and Heat Biologics, which just filed its plans last week.
Heat Biologics, a 5-year-old Chapel Hill company with six employees and another six part-time workers and consultants, is developing cancer treatments. The company, which recently raised $5 million from private investors, has targeted raising up to $19 million in an IPO.
Ratliff said that although Quintiles’ business hasn’t changed at its core – “our focus is on our customers” – the increased visibility that goes with being a publicly traded company will be a plus in attracting employees.
The issue of offering stock options to employees in light of the IPO, however, has yet to be addressed. “Those decisions will be made in the future,” Ratliff said.
Even as a privately held company, Ratliff stressed, Quintiles has managed to attract “a world-class workforce” that was crucial to the company’s successful IPO.
“We’ve been able to attract the best and brightest,” he said. “We have 800 (physicians), 850 Ph.D.s.”
Quintiles has plenty of competition for top talent locally. It was a pioneer of the CRO industry, and its presence in the Triangle helped the region emerge as an industry hub. CROs such as INC Research, PRA International and PPD are either headquartered locally or have major operations here.
Some of the proceeds from Quintiles’ IPO also could be used for acquisitions. In addition, using the company’s stock rather than cash to acquire a business “is always an option” for a publicly traded company, Ratliff said.
Quintiles hasn’t been shy about making strategic acquisitions to grow its business in recent years.
Gillings and his family own a 19.2 percent stake in the business after the IPO. That stake is worth more than $1 billion. In addition, Gillings reaped $100 million by selling 2.5 million shares in conjunction with the IPO.
It’s unclear whether Gillings’ former wife, Joan Gillings, retained an ownership stake in the shares controlled by Dennis Gillings, which include several different legal entities that list him as general partner. When Dennis Gillings filed for divorce after 32 years of marriage, their ownership stake was at the center of a contentious legal battle that ended in an out-of-court settlement that wasn’t disclosed.
Quintiles spokesman Phil Bridges said in an email message that he has no information on the matter.
No events commemorating Quintiles’ successful IPO were planned Thursday at its landmark headquarters building off the Page Road exit of Interstate 40.
“Today is going to be a normal work day,” Ratliff said. “We’re going to be out there trying to please our customers.”