Update: the IPO went off at the top of its range, I am sorry to report. More here from FierceBiotech, and I agree with John Carroll’s take.
I wrote just recently about Axovant and their plans to go public with an Alzheimer’s therapy picked up on the cheap from GSK. Now here’s a look from Adam Feuerstein at TheStreet.com at the whole situation, and it reeks even more than I’d thought.
20% of the company is being sold to the public, in an offering that’s recently been scaled up to $250 million. And it’s one of those friendly, welcoming deals, if you run in the right circles:
You with me so far? Hedge fund guy forms a company and subsidiary to buy an old Alzheimer’s drug Glaxo didn’t seem to want for $5 million. Six months later and without doing any clinical development at all, hedge fund guy sets terms for IPO of shell subsidiary which values the same old Alzheimer’s drug at well over $1 billion.
It gets better. Perhaps sensing reluctance from outside investors to buy a minority stake in an old Alzheimer’s drug Glaxo seemingly gave away for almost nothing, Ramaswamy gets two more hedge funds — RA Capital and Visium Asset Management — to “indicate an interest” in buying shares in the Axovant IPO valued at up to $150 million.
As inducement for their interest in the Axovant IPO, RA Capital and Visium are allowed to sell their shares (if they buy) after 90 days. The customary lock-up period for insiders in an IPO is 180 days.
The biotech bull market is a wonderful thing. . .
Indeed it is, if you’re on the nice side of it. But if this IPO goes off well this week, I’m going to have to take it as a sign of undeniable craziness in the market. There really seems to be no reason for Axovant to be going public at this time and under these terms, other than the fact that there’s a horde of people outside its door, jumping up and down and waving fistfuls of money. If that’s your idea of a sustainable market, or if it just sounds like a fun time, then go ahead, I guess. Caveat bug-eyed, clueless emptor and all that.