Waksal's Kadmon IPO crumbles after raising $75M


Unlikely IPO candidate Kadmon ($KDMN) made it out amidst a tough IPO market--and swirling criticisms of its rather infamous current and former management, namely the Waksal brothers. But the company didn’t raise nearly as much as it had hoped--downsizing to a $75 million offering from a planned $100 million early this week.

The biotech priced at the bottom of its proposed share range at $12. In early trading, Kadmon’s share price fell to almost $10, despite elaborate backing from existing shareholders.

To get the deal done, existing investors committed to buying $40 million of the IPO, making them responsible for more than half of the completed financing but lowering the bar greatly for attracting new, public market investors.

Sam Waksal founded Kadmon in October 2010 and headed it as CEO until August 2014. Not surprisingly, this attracted considerable attention at the time given that he had pled guilty to and served jail time for charges related to insider trading at ImClone Systems including securities fraud, bank fraud, wire fraud, obstruction of justice, perjury and related conspiracy charges.

He was cashed out ahead of the IPO with a severance package that could total $25 million. Sam’s brother, Harlan Waksal, founded ImClone, which sold for $6.5 billion in 2008 to Eli Lilly ($LLY). He is now the President and CEO of Kadmon.

The pair has already raised and spent a staggering sum of cash through Kadmon--blowing through more than $675 million in the less than 6 years from its inception to the end of the first quarter. Even with all that fundraising, Kadmon was running on fumes with only $8.6 million in cash at March 31 with a first quarter net loss of $32.8 million.

All that cash has bought the company a pipeline headed by a pair of Phase II candidates: rho-associated coiled-coil kinase 2 (ROCK2) inhibitor KD025, which is in Phase II testing to treat idiopathic pulmonary fibrosis (IPF) and for which Phase II testing is planned in moderate to severe psoriasis and other autoimmune diseases, and oral tyrosine kinase inhibitor (TKI) tesevatinib, which completed a Phase II trial in treatment-naïve non-small cell lung cancer (NSCLC) patients with activating EGFR mutations and is in an ongoing trial in NSCLC with activating EGFR mutations in patients with brain metastases or leptomeningeal disease.

Major investors in Kadmon include Golden Tree Asset Management (18.1% post-IPO stake), Third Point Ventures (13.6%) and 3RP Holdings (7.8%).

- here is the release
- and here is the latest S-1 filing

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