BioWorld International Correspondent
A cautious pricing strategy paid off for TopoTarget A/S, as its initial public offering of 10 million shares on the Copenhagen Stock Exchange, which yielded gross proceeds of DKK225 million (US$36.5 million), was more than six times over-subscribed.
The greenshoe option of 1.5 million shares, which is being exercised, will add an additional DKK33.75 million, before expenses.
Moreover, investors gained a reasonable pop, as the share price closed at DKK26.30 Friday, its first day of trading, up almost 17 percent from its IPO price of DKK22.50. The Danish company had set a range of DKK20.50 to DKK25.50.
The positive response prompted questions about the company taking an overly conservative approach, but analyst Annette Rye Larsen at Copenhagen, Denmark-based HSH Gudme said the pricing strategy was influenced by market feedback from institutional investors.
"I think they did it on purpose to make sure it would become a success," she told BioWorld International.
Peter Buhl Jensen, CEO of Copenhagen-based TopoTarget, told BioWorld International the approach also was influenced by an "ice-cold" European climate.
"We would like to see a good story with our company and certainly a good after-market," he said.
TopoTarget had raised €15 million (US$18.1 million) in a pre-IPO funding round earlier this year. The company, Jensen said, will focus its resources initially on its own pipeline of cancer therapeutics. "I think we've got our hands full right now. We've got eight programs in clinical development."
However, it also is open to using its stock as currency.
"If Europe is a difficult place for IPOs, we believe we can deliver an exit for other companies," he said. "We are the combined fruit of three companies. We are not scared about consolidation and M&A activities." TopoTarget, which was established in 2000, acquired Prolifix Ltd., of Abingdon, UK, and G2M Cancer Drugs AG, of Frankfurt, Germany, during its existence as a privately held company.
Post-IPO, TopoTarget has about 38.4 million shares outstanding. In conjunction with the IPO, the company issued almost 2.4 million new shares to several holders of convertible debt, including strategic partner CuraGen Corp., of New Haven, Conn.
Its shareholder base includes some 4,500 investors. Danish retail investors received 17 percent of the IPO shares, while overseas investors accounted for 32 percent.