Branford Biotech Wraps up Initial Public Offering

March 13, 2018

BRANFORD — BioXcel Therapeutics has completed an initial public offering of its stock, officials of the Branford company said in a statement released Monday after the close of trading for U.S. financial markets.

The company offered 5.45 million shares of its common stock at a price of $11 per share, according to a filing with the federal Securities and Exchange Commission. The IPO raised $60 million in gross proceeds, according to company officials.

The company's stock began trading on the Nasdaq exchange on March 8 under the ticker symbol BTAI. BioXcel Therapeutics stock closed at $10.31 per share on Tuesday, down 12 cents from the close of trading on Monday.

The proceeds from the IPO will be used to fund the Phase II testing of the company's two most advanced drug candidates: BXCL501 and BXCL701. About $42 million of the total amount raised through the IPO will be used for Phase II research, with much of the remaining money slated to be used for working capital and for general corporate purposes, according to the company's SEC filing.

Phase II trials in the U.S. Food and Drug Administration's approval process come after it has been determined that the drug is safe for humans to take.

The Phase II trials are used to determine how well the drug candidate works and involve testing them on patient groups of between 25 and 100 people.

Company officials believe that the proceeds from the IPO are enough to keep it operating for another 12 months, according to the SEC filing.

BXCL501 is administered under a patient's tongue and is a drug candidate designed to treat agitation resulting from neurological and psychiatric disorders, according to company officials. BXCL701 is designed to use the human immune system for treatment of a rare form of prostate cancer as well as pancreatic cancer.

The company uses artificial intelligence to identify new medicines for use in neuroscience and immuno-oncology. It is located at 780 E. Main St. in Branford.

David Cadden, a professor emeritus at Quinnipiac University's School of Business, said the valuation of a company that is doing an IPO “operates on what the perceived potential value of the company is.”

“For a pharmaceutical company, it would be based upon what kind of drugs are in its pipeline, the likelihood of those drugs being approved by regulators and what the expected rate of return is while they are under patent protection,” Cadden said.

IPOs captured the imagination of even the smallest investors during the 1990s and 2000s, he said. But the number of IPOs has declined since then, Cadden said.

“And that raises some significant issues since an IPO is one way of bringing in capital from outside the firm,“ he said. ” It's not like taking in bank loans where you have to pay it back or working with a venture capital firm.”

Each potential funding method has its pros and cons, Cadden said.

“When you open yourself up to outside investors, they're going to want input into how the company is run,” he said.

Cadden said more than 60 percent of stock in publicly traded companies is owned by institutional investors such as state employee pension funds. Depending upon the amount of stock that an institution investors holds in a company, they can wield significant influence when it comes to making business decisions, he said.

Another method of bringing outside capital into a company is dealing with a venture capital firm, Cadden said. But venture capital firms typically want a large stake in a company and seek to recover their investment over a comparatively short period of time, usually five-to-seven years, he said.

Source: New Haven Register