U.K.'s Shield pulls off an IPO but dramatically cuts its flotation price

By Ben Adams

In a sign of the continuing headwinds for biotech, Shield Therapeutics has had to cut both its price and its original aims to see through its U.K. IPO.

In September last year, Newcastle-based Shield announced plans to float on the London Stock Exchange in a listing that was expected to raise £110 million ($169 million).

However, given the ongoing volatility across equity markets--amid growing concerns of an impending recession--the company has only raised £32.5 million ($47.1 million) after a four-month postponement. It also abandoned its original plan to list on the LSE in favor of the junior Aim market, according to the Financial Times.

But the fact that the company--which is set to gain final European approval for its iron deficiency anemia pill Feraccru any day now--saw an IPO at all is a sign that there may be cracks of light shining through the storm.

Shield CEO Carl Sterritt

IPOs are a good way of discovering the correct price for a company's equity, but bankers won't float when markets are highly volatile; so if Shield is being used as a test of what the current market will bear, there might just be an uptick in investor confidence.

Money from the IPO will be used to help fund the marketing for Feraccru. It did need the full £110 million, however, for costs of bringing Feraccru to market--it remains to be seen whether its £32.5 million will be enough, especially as the company is running on fumes after making an operating loss of £3.4 million in 2014.

Shield of course wanted to present the news as a positive, with Carl Sterritt, a Shield executive, telling the FT he was "delighted by the enthusiasm we have received from investors," in spite of market woes.

Shield, which currently has about 20 employees, is also developing PT20 for the treatment of chronic kidney disease.

Globally, the value of IPOs fell by 36% between 2014 and 2015 from $263.8 billion to $193.9 billion, according to data provider Dealogic. Life sciences have been particularly hit, with the U.S. biotech industry witnessing a major slowdown last year.

- read Shield's statement
- here's the FT story

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