Sweden's Oasmia Pharmaceuticals ($OASM) has faced a bit of a tough journey to Wall Street since breaking free of Zoetis ($ZTS) in July and striking out on its own to develop cancer drugs for both pets and people. On Friday, the company pulled off its promised IPO, going public for $4.06 a share and raising an estimated $9.5 million--less than half of the $23 million it had planned to raise.
Oasmia markets Paccal Vet-CA1, a specially formulated version of the commonly used chemo drug paclitaxel, which it makes available for veterinary use on a limited basis under a conditional FDA approval. Zoetis was distributing the drug in the U.S., but Oasmia's executives decided to regain the distribution rights after the animal health giant embarked on a major restructuring earlier this year. Oasmia also regained rights to a version of the chemo drug doxorubicin, called Doxophos Vet, which it is currently developing.
Just before the Nasdaq offering, Oasmia announced that its second-largest shareholder, Nexttobe, extended a loan to the company of 94.4 million Swedish Krona ($11.1 million).
Oasmia, which also trades on Nasdaq Stockholm and the Frankfurt Stock Exchange, has established a sales presence in the U.S. The company initially estimated that the proceeds of its U.S. Nasdaq offering would fund its operating expenses for 12 months. The company also hoped to use the IPO proceeds to launch new clinical trials and ramp up its development activities, according to the F-1 it filed over the summer.
Just how much of that will be possible in light of the downsized IPO is open to question. Earlier this month, after dialing down the expected price range for the offering, Oasmia tried to sweeten the pot for investors even more by offering one warrant for every two shares it sells in the IPO. The warrants allow investors to buy shares at 125% of the offering price for up to four years. If investors take the option, Oasmia could boost its haul by 60%.
Still, Oasmia is debuting in the U.S. amid a difficult market for animal health companies. Just two weeks ago, shares of Aratana Therapeutics ($PETX) plummeted on news that its two highly anticipated lymphoma drugs for dogs were unlikely to perform as well in the market as initially anticipated. Newer offerings like Jaguar Animal Health ($JAGX) continue to stagnate: Its shares have dropped from a one-year high of $7.06 to $2.11.
Investors are clearly reluctant to buy into Oasmia's U.S. expansion plans. By the close of trading on Friday, the company's shares had dropped nearly 4% to $3.90.
- access the IPO details here
- here's the release on the loan extension