Pricing significantly below its intended range, Memory Pharmaceuticals Corp. raised $35 million in its initial public offering Monday.
The Montvale, N.J.-based company offered a total of 5 million shares at $7 each. It originally filed in December to raise up to $86.25 million.
Memory's IPO fits into a recent trend of companies willing to price below expectations in order to take advantage of the slightly open window. Santarus Inc., of San Diego, filed for its IPO at the same time as Memory, but Thursday also priced below its range - raising $54 million instead of its intended $85 million. (See BioWorld Today, Dec. 30, 2003, and April 2, 2004.)
Memory focuses on treating central nervous system disorders such as Alzheimer's disease, vascular dementia and schizophrenia.
The company, which could not comment Monday due to SEC-imposed quiet-period rules, has 19.4 million shares outstanding following the IPO. According to its prospectus, Memory expects to receive net proceeds of about $30.6 million. Of that amount, it will use $26 million for research and development activities. The majority of that will be used to fund its nicotinic alpha-7 programs and its Phase IIa trials for MEM 1003. The rest of the $26 million will be used for the discovery and development of molecular targets. About $2.6 million will be used for capital expenditures in connection with a planned laboratory facility expansion, and the remainder will be used for working capital and other general corporate purposes.
The company is listed on the Nasdaq National Market under the symbol "MEMY." The stock surged 20 percent on Monday to close at $8.40 - $1.40 north of its IPO price.
Underwriters for the IPO are New York firms SG Cowen Securities Corp. and UBS Investment Bank as co-lead managers. Banc of America Securities LLC and Fortis Securities LLC, both of New York, are co-managers. The underwriters have an overallotment option for up to 750,000 shares of common stock.
Memory's technology is based on research by scientific co-founder Eric Kandel, who identified cellular pathways and biological targets involved in the formation of short-term and long-term memories. Kandel was awarded the 2000 Nobel Prize in physiology or medicine.
The company has four compounds in development. MEM 1003 is a neuronal L-type calcium channel modulator being developed for Alzheimer's disease. Memory has completed Phase I trials in 185 healthy volunteers and is designing a Phase II trial. MEM 1003 also might be effective in vascular dementia and mild cognitive impairment.
Also in the pipeline Memory has MEM 1414, a phosphodiesterase-4 inhibitor to treat Alzheimer's disease, and MEM 3454 a partial agonist of the nicotinic alpha-7 receptor to treat schizophrenia. MEM1414 is in Phase I trials, while MEM 3454 is expected to enter Phase I trials soon.
At the preclinical stage, the PDE4 inhibitor MEM 1917 has shown promise in preclinical tests against depression. The product is undergoing toxicology studies and preclinical animal studies in cognition and depression.
The PDE4 inhibitors and nicotinic alpha-7 partial agonists are partnered with F. Hoffmann-La Roche Ltd., of Basel, Switzerland. (See BioWorld Today, Sept. 19, 2003.)
As of Dec. 31, Memory had received $36.7 million through its Roche collaborations. It could receive up to $248 million total in milestone payments, as well as royalties. While the company had cash and cash equivalents of $30.1 million at the end of the year, it incurred a $21.8 million net loss for 2003 and reported an accumulated deficit of $94.3 million.