Like a number of biotechs these days, Kadmon had to lower its price and bump up the number of shares to get its IPO done. Unlike the rest of the field, though, it also had to send off its scandal-tainted founder before it filed the offering.
By the weakened standards of the hour on Wall Street—where investor interest in biotech has cooled—Kadmon Holdings did pretty well, raising $75 million by selling 6.25 million shares at $12 apiece, the low end of the range it had set for itself. That’s considerably less than the $100 million-plus the New York City-based biotech had hoped for.
It wasn’t an auspicious debut. Kadmon’s shares $KDMN immediately slid 5% after trading began Wednesday morning and then crumbled by about 20% by the time the market closed.
Instead of focusing on the 6-year-old biotech’s mid-stage pipeline of cancer drugs, the financial press that covers the field remains fixated on Sam Waksal, the company founder who roped Martha Stewart into an insider trading scandal years ago, when they scrambled to protect themselves from a temporary setback at ImClone.
It was a crude bit of chicanery that captured the public’s attention and left Waksal sitting out of the game for 5 years to serve a prison sentence. But when he got out, he found there were still a number of high-profile investors willing to back his next biotech play.
The Wall Street Journal tried to get a few of them on the phone recently, but Steven A. Cohen, Daniel Loeb and Ronald Burkle, investment banker Ken Moelis and GoldenTree Asset Management weren’t putting their mouths where their money is.
RA Capital Management’s Peter Kolchinsky, though, gave Waksal a nod of support.
“Sam is a proven drug developer who paid his debt to society and led a credible team responsible for the discovery and development of [cancer drug] Erbitux, which has helped hundreds of thousands of patients,” Kolchinsky told the Journal. Kadmon’s assets “should be assessed on their scientific and clinical merits.”
Waksal was barred from being involved in a public company after the ImClone mess, but he still owns shares in Kadmon, now run by his brother Harlan. And when he left Kadmon earlier this year, he carried away a severance package that included up to $25 million in milestone payouts.
Kadmon may never shake off the notorious relationship. But now the biotech has to see if it can move its pipeline of drugs to an approval.
The data will have to speak for itself.
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