Those readingID Biomedical's press release justifying its decision to pull its follow-on on Friday might have asked what happened to the bull market for biotech. Since filing the deal on Sept. 25, IDBE said it had "seen a significant decline in the biotechnology sector."
Indeed, the BioCentury 100 shed 10.5% the week the company filed, but IDBE had held up relatively well given the 5 million share overhang. The day prior to filing, its NASDAQ price was $19.79, and it had fallen $3.37 (17%) to $16.42 by last Thursday's close, before announcing it was pulling the deal.
While that's nearly double the 8% average haircut for follow-ons sold through July of this year, IDBE's shares still are up $10.07 (151%) for the year on NASDAQ.
Digging a little deeper shows that the deal didn't get done because the company decided there would be too much dilution, and thus its decision shouldn't be taken as a red flag that demand is waning. "Obviously it was our desire to get a transaction completed, but it needed to make sense for our current shareholders," said spokesperson Dean Linden. "At the prices being discussed, it did not make sense to proceed."
CIBC's Peter Crowley agreed that price sensitivity drove the withdrawal, not lack of demand. "They had put us on notice that they wanted to sell stock at a given price, and they didn't want to be on the road
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