Virpax raises $40M to use delivery systems to improve pain drugs

Virpax Pharmaceuticals crept onto public markets earlier this year, grossing $18 million to support its work to use delivery systems to improve pain drugs. After seeing its share price soar in response to progress against COVID-19, Virpax filed to raise more money—only for its stock to come crashing back down to Earth.

Pennsylvania-based Virpax pitched itself as a pain company when it went public in February. Yet it was an update about the use of a candidate as an antiviral nasal spray, an application that was only mentioned briefly in the IPO paperwork, that put Virpax on the map with investors in August. 

While the stock has fallen sharply since the COVID-19-fueled surge, Virpax still managed to gross $40 million through its stock offering last week. The money will support work on three pain treatments delivered via sprays and injectable long-acting hydrogels along with the antiviral barrier candidate.

Virpax CEO Anthony Mack will pocket a slice of the cash. In 2018 and 2019, Virpax agreed to pay Mack $500,000 plus interest at 11% a year. Virpax has until the end of 2023 to pay the money but has earmarked $1.3 million of the fundraise to cover its obligation to Mack. The CEO is set to receive a further $1.1 million in deferred compensation. 

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Mack joined Virpax in 2018 on an annual base salary of $375,000 last year and elected to defer his compensation until March 2021. With the period in which Mack chose to forgo his salary now over, Virpax plans to use almost $1.1 million to cover the compensation it owes to its CEO.

The payments to Mack will swallow up around 6% of net proceeds from the initial phase of the stock offering. Virpax had originally aimed to net $46.2 million, but its stock tanked after news of the share offering emerged. The stock went from trading at $14.70 to being sold at $6 in the offering. Virpax sold more shares to make up the shortfall, causing net proceeds to come in at $36.9 million.