The sizzling market for biotech IPOs will end one day, but it won't be today. Randal "RJ" Kirk's synthetic biology company Intrexon ($XON) made its debut on Wall Street today and shares quickly zoomed up past the $22 mark, leaving the company with a hefty market value of more than $2 billion and its wealthy chief executive with another fortune.
Intrexon raised $160 million today after selling 10 million shares at $16--adding shares and selling them at the high end of its range. But enthusiastic investors quickly bid up the price by 42%, to $22.80, by late morning. That puts Intrexon in with a growing number of biotech companies to create some overnight millionaires with extraordinarily successful maiden offerings.
For Kirk, it's his third big hit in a storied biotech career. Worth an estimated $2 billion (much higher after today), Kirk sold New River and Clinical Data and kept a large part of the fortune for himself. In SEC documents Kirk noted that he and related entities he controls own close to 100 million shares of Intrexon--the lion's share of equity worth $2.2 billion today.
Kirk's venture group has spearheaded an investment of more than half a billion dollars for Intrexon, which he believes is blazing a new path to more efficient drug development. In recent years the biotech--a 2011 Fierce 15 company--has partnered with a long lineup of low-profile companies. Last year it recorded losses of $103 million on $14 million in revenue.
For the four years after the 2008 financial crisis, biotech companies awash in red ink became anathema to investors running away from risk. Drug development is one of the riskiest endeavors on the planet, and Intrexon's S-1 repeated boiler plate language cautioning that there are no guarantees that its products will be approved. In 2013, though, big risks are winning big rewards.
With valuations like this, you can expect plenty more IPOs in a year that's already seen the biggest surge for new offerings in more than a decade.
- here's the story from Reuters
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