It takes a really good story to complete a successful biotech IPO these days. The key elements: Hot technology, deep pocket investors, and a hefty crossover round sitting in the bank with a clean shot at an important near-term catalyst.
Gemphire didn’t have any of that. And as a result, it was fortunate to wind up raising half of what it set out to gain when it filed its S-1 back in April.
The Northville, MN-based biotech $GEMP captured $30 million by selling 3 million shares at $10 each. And its shares traded down on its first day, dropping 8%. That fits into the experience of most new biotech IPOs, which generally are not doing well after their debut.
Gemphire had just a few million in cash six months ago, leaving it without the reserves needed to get very far without a fresh injection of capital. It has one drug in the clinic, gemcabene, in-licensed from Pfizer, which is still under a 12-year-old partial clinical hold at the FDA that prevents the company from running a study that lasts longer than six months due to toxicity concerns. And it’s focusing on a cholesterol pill for patients with homozygous familial hypercholesterolemia (HoFH), a field that has attracted a considerable amount of interest from rivals in recent years.
The company was founded by a pair of Pfizer vets, Charles Bisgaier and David Lowenschuss, who landed rights to the drug in 2011. But the S-1 also notes that Pfizer can still revoke the license, with a provision that it can get the drug back in five years if Gemphire can’t adequately commercialize the drug.
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