Helicos shares began trading on the Nasdaq exchange last week, but not before the company cut by 40 percent its original per-share offering price.
Helicos, which became the only publicly traded pure-play next-generation sequencing shop, floated its 5.4 million shares at $9 apiece to raise around $43.2 million in net proceeds.
Earlier last week, Helicos cut the price of its shares to between $10 and $11 per share from an original projection of between $13 and $15 per share, according to a Securities and Exchange Commission filing.
The reduction also cut the firm's adjusted capitalization, which was lowered to $66.7 million.
In its latest SEC filing, Helicos said it could raise an additional $12 million if certain of its existing investors fulfill a promise to buy an additional 1.3 million shares at the final offering price. These investors, all of which are private-equity firms, include Flagship Ventures, Atlas Venture, Highland Capital Partners, MPM Capital, and Versant Ventures.
Underwriting the IPO were UBS Securities, which bought 2.7 million shares; JP Morgan Securities, which acquired 1.62 million shares; and Leerink Swan & Co. and Pacific Growth Equities, which each picked up 540,000 shares.
In the SEC filing, Helicos said it plans to use around $20 million of the proceeds to develop its HeliScope system and its tSMS technology, while the remaining $20 million or so will help the company market, sell, and manufacture the HeliScope.
In a prospectus filed with the SEC on May 7, Helicos initially estimated it would price its shares between $13 and $15 apiece. But on May 23 the company reduced that range to between $10 and $11 per share. The following day it cut the price to $9. It did not say why. Helicos declined to comment, citing SEC quiet period regulations.
“Part of the problem with really small offerings like this one is that retail investors are not aware of the ‘brand’ so they are not interested, [while] it is too small for institutional investors to get really interested because of the size; it is not worth their time and effort to research the company to invest in it.”
Also, the stock lost 4.4 percent of its value in its first day of trading, and has continued to slide. The shares are currently trading down 5 percent since they went public.
According to one economist, investors either passed on the stock or bought in unenthusiastically because the size of the IPO didn’t thrill them.
“Part of the problem with really small offerings like this one is that retail investors” — individuals not associated with institutions — “are not aware of the ‘brand’ so they are not interested,” according to Reena Aggarwal, a professor of finance at Georgetown University. “At the same time it is too small for institutional investors to get really interested because of the size; it is not worth their time and effort to research the company to invest in it.”
Similar challenges faced miRNA technology company Rosetta Genomics, which went public in March after postponing an IPO last fall. The company began trading on the Nasdaq exchange after pricing its 3.75 million shares at $7 apiece, 46 percent below the high end of its original offering range of between $11 and $13.
However, despite postponing its IPO, cutting more off its original offering price than Helicos, and raising less cash than the next-gen sequencing company, shares in Rosetta Genomics jumped 24 percent in the opening hours of trading. The shares slid more than 7 percent over the ensuing seven weeks, but have rebounded to trade 11 percent above their IPO start.