The IPO Buzz: A Single Rose Before Summer Ends

The last rose of summer appears on this week’s IPO Calendar and then Wall Street is off to vacation land until after Labor Day. The $28 million deal, set for pricing on Monday night, is slated for Tuesday’s trading.

The IPO is Aridis Pharmaceuticals (ARDS proposed), based in San Jose, California. It is a late-stage biopharmaceutical company formed to discover targeted immunotherapies for life-threatening infectious diseases that are resistant to antibiotics, including hospital-acquired pneumonia. The company’s antibody discovery platform, called MabIgX, works by screening and isolating human antibody-producing B-cells from individuals who have overcome a certain pathogen or have been vaccinated.

(For more information about this company, please check the profile found on the website.)

What makes this IPO interesting is that insiders are lined up to buy up to $25 million of the $28 million deal – or 89.3 percent of the underwriting. The size is 2 million shares at $13 to $15 each. That leaves about 214,286 shares available for public investors. If the underwriters were to add the over-allocation of 300,000 shares, or “the greenshoe” in Wall Street jargon, that would more than double the number of shares available for public investors.

Check Out the Insiders

One question the IPO players ask about the biotech deals is: “Are insiders buying into the IPO at issue price?” If so, the deal could do well in the aftermarket. The facts seem to back up this assumption.’s “2018 Pricings” show 12 IPOs had more than doubled from their initial public offering prices as of the close on Friday, Aug. 10, 2018. Of the dozen deals, four were biotech IPOs – and each had insiders buying shares at the IPO prices.

Naturally, not everything works out as planned. This year’s two worst aftermarket performers were biotechs – and each had insiders purchasing shares in the offerings.

In addition, the most recent biotech was priced last week. It was Vaccinex (VCNX), a clinical-stage biotechnology company engaged in the discovery and development of targeted biotherapeutics to treat serious diseases with unmet medical needs, including neurodegenerative diseases, cancer and autoimmune disorders. Its lone insider bought $29.5 million of the $40 million offering – or 73.8 percent of the IPO – according to its prospectus. The deal’s size was 3.3 million shares.

Vaccinex closed on Friday at $11.50 – down 50 cents from its IPO price of $12.

This brings us back to this week, when August’s IPO market is winding down with just one deal – a biotech IPO with insiders asking for 89.3 percent of the stock.

August – Over and Out

August appears to be easing into “over and out” mode. Fr the week of Aug. 20th, there is nothing on the IPO Calendar.

Stay tuned.

Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and staff do not issue advice, recommendations or opinion.