NephroGenex shares fall nearly 4 percent in first day of trading

dbracken@newsobserver.comFebruary 11, 2014 

NephroGenex shares fell nearly 4 percent Tuesday after the Research Triangle Park drug developer became the second local company in a week to complete an initial public offering of stock.

NephroGenex priced its shares at $12 late Monday, the low end of its target range of between $12 and $14 a share. Investors initially pushed the stock as high as $12.40 in morning trading before it closed at $11.54.

NephroGenex sold 3.1 million shares, and underwriters have the option to purchase an additional 465,000. The company expects to raise about $37.2 million in net proceeds from the offering before deducting other expenses. The shares trade on Nasdaq under the ticker symbol “NRX.”

NephroGenex continues an unprecedented run for Triangle companies in the public markets. Seven local companies completed IPOs last year, and an eighth, Durham’s Argo Therapeutics, went public Friday. Square 1 Bank, a Durham-based financial institution that caters to entrepreneurial companies that aspire to go public, is also planning an IPO.

NephroGenex and Argos are part of a wave of biotechnology companies seeking to go public recently. Although the sector has outperformed the broader market over the past three years, there are signs that the IPO market for such companies is cooling.

Argos shares have barely budged from their IPO price of $8. The stock closed Tuesday at $8.04.

NephroGenex executives couldn’t be reached for comment Tuesday. The company has three employees and seven executive officers. It is developing Pyridorin, an experimental treatment aimed at slowing the progression of a chronic, degenerative disease of the kidneys caused by diabetes called diabetic nephropathy.

About 6 million people suffer from the disease, according to NephroGenex.

The company had originally scheduled its IPO for Friday, but its pricing was delayed after NephroGenex notified the Securities and Exchange Commission that its largest shareholder, New Jersey venture capital firm Care Capital, agreed to purchase an additional $10.4 million worth of shares at its IPO price.

That pushed Care Capital’s ownership stake to 48.7 percent post-IPO.

The company’s SEC filing last week noted that “Care Capital will exert significant influence over us and any action requiring the approval of the holders of our common stock.” That makes it “less likely that any other holder of common stock or directors of our business will be likely to affect the way we are managed and could delay or prevent an acquisition of us on terms that other stockholders may desire.”

Two directors on NephroGenex’s six-person board are Care Capital partners, including Richard J. Markham, who has been chairman since October. Markham is the former vice chairman and chief operating officer of pharmaceutical giant Aventis.

Bracken: 919-829-4548; Twitter: @brackendavid

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