CombiMatrix moved from Nasdaq’s small cap market to the electronic stock exchange’s national market on Friday after satisfying exchange requirements on share pricing, withhopes of attracting institutional investors.
CombiMatrix, the life-sciences business of Newport Beach, Calif.-based Acacia Research Corporation will continue to trade under the CBMX symbol. CombiMatrix is one of four US-based tracking stocks remaining — a vestige of the high-growth days of the dot-com and high-tech boom in the 1990s when publicly traded companies created tracking stocks to allow investors to invest, for example, in the growth of Internet subsidiaries.
Today, according to the Bloomberg news service, US trackers beside CombiMatrix include Celera Genomics of Applera, the University of Phoenix Online unit of Apollo Group, and Carolina Group, which is tied to Loews Corporation’s cigarette business.
CombiMatrix met the last of the exchange’s requirements for listing when its stock met a minimum bid price of $5 for 90 consecutive trading days, Amit Kumar, the company’s chief executive officer, told BioArray News.
“For growth companies, the Nasdaq is the best exchange,” he said.
CombiMatrix never had the opportunity to enjoy a successful initial public offering. In November 2000, the company filed the paperwork for an initial public offering with the US Securities and Exchange Commission, following another Washington-based company, Rosetta Inpharmatics, which raised $100 million with an IPO in August 2000. However, the market downturn effectively ended IPO hopes for the Mulkiteo, Wash.-based CombiMatrix.
In 2002, CombiMatrix received a listing on Nasdaq’s small-cap market when parent company Acacia separated its units into two classes, representing CombiMatrix and Acacia Technologies, which licenses its V-chip technology to television manufacturers. The parent company also opted to raise its 48 percent ownership stake in CombiMatrix to 100 percent in a $46 million stock-for-stock exchange accounted as a “step acquisition,” according to the company’s 2003 annual report.
“We anticipate that just by moving from the small-cap market, there will be a lot more interest in the company,” Kumar said.
Early on, investors appeared unimpressed. The stock opened on the Nasdaq’s national exchange at $6.30 on Friday and closed Monday at $6.26, as the Nasdaq dropped 46 points in reaction to overseas events.
One segment of investors that CombiMatrix hopes to attract with this move is deep-pocketed institutions.
“There is a big group of investors and the big mutual funds, like the Fidelities and Vanguards, who can’t touch your stock unless you are on the national exchange,” Kumar said.
Institutional investors, who buy their stocks in blocks of thousands or millions of shares, are actively investing in the pure-play microarray companies in the public sector — Affymetrix, the industry leader, as well as Illumina and Nanogen (see table, page 5). And, clearly CombiMatrix has been wooing them with company executives making presentations at events such as the Roth Capital Partners growth stock conference in February, or the upcoming Invest Northwest Conference in Seattle in March, while also hosting commercial booths at trade shows like the Association of Biomolecular Resource Facilities in Portland, Ore., earlier in the month.
“We have spent a lot of time teaching [investors] about the company, Kumar said.
Meantime, the company continues to commercialize CustomArray, its first product line, introduced in February with the rollout of the CustomArray 902 chip, a low-density, custom-made electronic microarray, which will be followed over the next two months by a high-density microarray chip, and then a synthesizer instrument.
Kumar said the tracking stock status of the Acacia companies is subject to separation, “at sometime in the future.”
Meantime, with its new status on the Nasdaq national market, the company will now have to produce the kind of numbers that all investors watch carefully, such as total revenues and year-over-year growth.
Last year, the company recorded total revenues of $456,000 while recording as deferred revenue payments of $9.8 million from a partnership with Roche and another $2.4 million from Japan’s Toppan.