Scynexis is on track to become the latest in a steady stream of Triangle-based companies to raise big bucks by going public.
The Durham drug-development company is expected to price its shares Wednesday after the markets close, according to IPOScoop.com, which publishes a calendar of initial public offerings of stock based on information from underwriters. If all goes according to plan, Scynexis would begin trading Thursday on Nasdaq under the ticker symbol “SCYX.”
Scynexis has targeted selling 4.2 million shares at between $12 and $14 per share, according to documents filed with the Securities and Exchange Commission. Its proceeds, after deducting fees and expenses, would be $47.6 million if its shares go public at $13.
Scynexis would be the third Triangle biotechnology company to go public this year.
“There are a few others coming out, I’m sure, over the next quarter of two,” said Clay Thorp, co-founder and general partner of Hatteras Venture Partners, a Durham venture capital firm that focuses on life science companies. “It means they are going to have better access to capital to fund their later-stage development.”
Scynexis, which doesn’t yet have a drug on the market, plans to use the money it raises from an IPO to develop its lead drug candidate and to pay down a loan.
The company is developing an intravenous drug for treating serious and life-threatening fungal infections.
The experimental drug, SCY-078, stemmed from a collaboration between Scynexis and pharmaceutical giant Merck. Last year Merck returned the development and commercialization rights to Scynexis.
Scynexis posted $16.9 million in revenue last year thanks to research-and-development services it performed for other companies. Its net loss was $30.5 million.
A trend in Triangle
Triangle companies have been taking advantage of a robust IPO market at an unprecedented rate.
Last year was the best year for IPOs since the turn of the century, and this year has started out even stronger, according to IPO investment firm Renaissance Capital. The number of IPOs nationwide so far this year, 64, is more than double that in the same period in 2012.
Wall Street has given those companies a warm reception once they begin trading. The average “pop,” or increase in the stock price, on the first day of trading is 20 percent.
Nationwide, nearly half of the IPOs thus far this year have been in the health care sector, according to Renaissance Capital.
In the Triangle, a record seven companies went public last year – including biotech companies Chimerix and Heat Biologics and diagnostics company LipoScience.
Scynexis would be the fourth local company overall to go public in 2014.
The most recent was Square 1 Bank, which made its trading debut last week. Biotech companies Argos Therapeutics and NephroGenex went public in February, each raising tens of millions of dollars.
Thorp said that the shares of biotech companies that went public in 2013 and thus far this year have, by and large, appreciated nicely.
“That sort of feeds on itself,” he said.
Not without hiccups
But Thorp, whose firm is one of the few that makes seed and early-stage investments in biotech companies, also said it remains tough for the raw startups that spin out of UNC-Chapel Hill or Duke University to raise their first round of funding.
“We’re not seeing as much competition as we would have thought,” he said.
The problem, Thorp added, is that there’s a lag time between a vibrant IPO market for biotechs and the formation of new venture capital funds willing to invest in early-stage biotech companies.