Zogenix IPO, Deeply Discounted, Raises $56M

Shares of San Diego-based Zogenix (NASDAQ: [[ticker:ZGNX]]) slid to $3.98 a share in the first day of trading today, after the drug-and-device startup substantially revised the terms of its initial public offering, raising less than anticipated.

The specialty pharmaceutical company, which launched its Sumavel DosePro, a needle-free injectable migraine treatment in January, raised a total of $56 million by offering 14 million shares at $4 a share. The company initially planned to raise close to $90 million by offering 6 million shares. The company later priced its shares between $12 and $14 a share.

Since it was founded in 2006, Zogenix has raised about $200 million from venture capital investors and debt financing. The biotech startup, which I profiled in August, has also been developing compounds for treating pain and central nervous system disorders, and plans to pair each new drug with its proprietary “DosePro” device. It was the second try for an IPO for Zogenix, which withdrew an effort to go public two years ago.

The stock offering raised a third less capital than the company intended, and the share price amounted to a 67 percent discount from the low end of the price range that Zogenix disclosed earlier this month. The results were eerily similar to the IPO outcome of another San Diego biotech—Trius Therapeutics slashed its offering by 62 percent in the final hours before its Aug. 3 IPO.

“These are just harder and harder to sell,” John McCamant, editor of the Medical Technology Stock Letter told The San Diego Union-Tribune today. “Every IPO seems to be getting a haircut because the others have gotten hair cuts.”

Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.