Shares of Chapel Hill-based Heat Biologics fell 4 percent in its first day of trading after the drug-development firm became the sixth Triangle company to go public this year.
Heat Biologics raised $25 million from its initial public offering of stock before paying fees and expenses, money that it plans to use to conduct clinical trials of its experimental cancer drugs and pay off some of its debt.
“It’s a really great event for us,” said CEO Jeff Wolf. “But I think, more importantly, it is going to give us the opportunity to bring much-needed drugs into the clinic and really benefit those in need.”
The small company priced 2.5 million shares at $10 per share late Tuesday, setting the stage for its shares to begin trading on NASDAQ under the ticker symbol HTBX. The quantity was greater than the 2.3 million shares that the company said it planned to sell earlier this month; the price, meanwhile, was at the low end of the $10-to-$12-per-share range that Heat Biologics was anticipating.
On Wednesday Heat Biologic’s shares fell 43 cents to close at $9.57.
The five-year-old company doesn’t have any drugs on the market. Its leading drug candidate is a lung cancer treatment that is in the second of three phases of clinical trials required by regulators before the company can seek marketing approval. It’s also developing a treatment for bladder cancer.
Heat Biologics says its technology is designed to reprogram human cells to stimulate a patient’s immune system and kill cancerous cells.
“We believe in this technology,” Wolf said. “We believe this is a transformational technology platform that really has the ability to help people with many different types of cancer.”
The company, which has five full-time employees and seven others who are part-timers or consultants, previously reported in a Securities and Exchange Commission filing that it plans to hire up to 10 employees over the next 12 months.
Triangle IPO surge
Heat Biologics is the latest – and by far the smallest – of a half-dozen Triangle companies that have had successful IPOs since the beginning of the year.
By contrast, in each of the past four years, just a single local company went public.
The Triangle companies that went public earlier this year are: Quintiles, the world’s largest pharmaceutical services company; medical diagnostics company LipoScience; drug-development company Chimerix; ChannelAdvisor, an e-commerce technology company; and vinyl siding maker Ply Gem Holdings.
In addition, Stock Building Supply, which sells building materials to the residential construction industry, last month filed plans to raise as much as $175 million via an IPO.
Wolf said that Heat Biologics decided that going public was more attractive than other funding possibilities, such as raising money from venture capital firms.
“There were many options for us in terms of funding,” Wolf said.
Heat Biologics raised $5 million from private investors in March. Prior to that, it raised $2.6 million in debt that was converted into stock in 2011. Also in 2011, the company received a $250,000 loan from the N.C. Biotechnology Center that it subsequently repaid.
Under the terms of that loan, the Biotech Center also received warrants for 29,762 shares of common stock at an exercise price of $2.10 per share. Based on Wednesday’s closing price, exercising those warrants would generate a gain more than $220,000.
Loans at critical time
Any gain that the Biotech Center realizes would be plowed back into its loan program.
“Our loans come at a critical time for these emerging companies when other investors won’t take a risk,” Biotech Center spokeswoman Robin Deacle said in an email. “The companies that we invest in go on to raise $117 on average for every $1 that they are loaned.”
The Biotech Center also helped recruit Heat Biologics from Florida in 2011.
“We decided to move here from Miami to grow out the company and to take advantage of the biotechnology infrastructure in the Triangle region as well as the really incredible talent pool in the region,” Wolf said. “It’s worked out great.”
A contingent of Heat Biologics executives led by Wolf were in New York City Wednesday to ring the closing bell on the NASDAQ market.
“We have a big celebration planned tonight in New York City,” Wolf said.