NEW YORK (AP) — Shares of drug developer Kadmon Holdings tumbled Wednesday after its initial public offering priced far below the company's estimates.
Kadmon said its offering of 6.25 million shares priced at $12 a share, raising $75 million in total. The company originally planned to sell 5.6 million shares for $16 to $20 each, which would have raised at least $89 million before expenses and discounts.
By mid-afternoon, Kadmon Holdings Inc. shares were down $1.87, or 15.6 percent, to $10.13.
The company is studying potential treatments for diseases including psoriasis and cancer. The company was founded in 2010 by Samuel Waksal, who was its chairman and CEO while it was a private company, and its current president and CEO is his brother Harlan Waksal. Both were formerly involved with the drug developer ImClone Systems, and in 2002 Samuel Waksal plead guilty to securities and bank fraud charges that stemmed from an in insider trading investigation. He spent almost six years in prison, and ImClone investor Martha Stewart went to prison as a result of the same investigation. Samuel Waksal is barred from serving as an executive of a publicly traded company as a result.
Harlan Waksal was not implicated in that investigation. He later resigned from ImClone, which was bought by Eli Lilly & Co. in 2008.
Samuel Waksal resigned from the company in February and Kadmon says it does not expect him to return as an employee or consultant or in any other capacity. He is entitled to $3 million in severance from the company over the next few years and could get more than $20 million in additional payments based on Kadmon's valuation, the performance of its drug candidates, and other items.
The company said it will use the proceeds of its IPO to conduct clinical trials of its drugs and do other research, and to repay a $3 million loan from Harlan Waksal.