Adarx Pharmaceuticals Concentrates IPO, Allocating 55% to Ten Investors

Adarx Pharmaceuticals Inc. concentrated a majority of its initial public offering in the hands of a few key backers, with 10 institutional investors receiving approximately 55% of the shares, according to a Friday report from Bloomberg.

IPO Details and Demand

The San Diego-based biotechnology company priced its upsized IPO at $17.00 per share, offering 26,250,000 shares of common stock. The offering is expected to generate gross proceeds of approximately $446.3 million before underwriting discounts, commissions, and other expenses are deducted.

The deal was met with significant interest from the investment community, attracting demand for about 10 times the number of available shares, the report noted. Orders reportedly came from a mix of long-only investors and funds specializing in the healthcare sector.

A Selective Allocation Strategy

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The distribution of shares was highly selective. In addition to the top 10 investors, the top 25 investors in the offering were allocated about 95% of the total shares. Citing people familiar with the matter, the report stated that company management was heavily involved in the allocation decisions, which left approximately 100 potential investors with no shares.

Such a concentrated allocation to a small number of institutional investors can be a strategy to build a stable, long-term shareholder base, which is often prioritized by development-stage biotech firms that may not have near-term revenue.

Market Debut

Adarx, a developer of RNA-silencing drugs, is set to begin trading on the Nasdaq Global Select Market on Friday under the ticker symbol ADRX. The offering was managed by a syndicate of banks that included JPMorgan Chase & Co., Morgan Stanley, Toronto-Dominion Bank, UBS Group AG, and LifeSci Capital.