Merrion goes public on IEX but postpones market entry into Nasdaq
Drug specialist Merrion Pharmaceutical has postponed the US leg of its initial public offering (IPO) following the squeeze in capital markets following on from the credit crunch.
Yesterday the company went ahead with a 2 million share placement on Dublin's IEX at a price of €4.05 per share ahead of its admission to that market on December 18. Shares trading in the grey market finished the day at €4.10.
The placing raised €5.6m but fell well short of the €20m-plus which was expected to be raised last October and lower again from the initial target of €48m.
And the €4.05 price was below the price range of between €6 and €7.
Delays
This is the second time Merrion has been hit by delays in the IPO process having earlier postponed both the IEX and Nasdaq plans after the company fell foul of aggressive pricing tactics by US institutional investors.
The company has been dogged by bad timing and resistance by investors when it comes to stock markets.
It is understood that Merrion will look at its options again in the US in the New Year. The company said yesterday that the Nasdaq is still "under consideration" but it is understood that the board has not yet decided
The company said yesterday that the total number of shares in issue when it lists will be 16,538,768 and, based on a share price of €4.05, the market capitalisation of the company will be €67.16m.
However, before the capital markets began to fall, it had been expected that Merrion would have a market capitalisation of between €111m and €180m.
Proceeds
Merrion Pharmaceutical's CEO Mike McKenna said that the majority of the net proceeds from the placing yesterday will be used to fund clinical trials and other research and development activities to progress the development of our key product candidates.
Merrion, which is backed by the family of the late Ryanair founder Tony Ryan, was founded by Growcorp, an Irish life sciences venture capital company, in 2003 to exploit drug delivery technology that was bought from Elan for $2.5m (€1.7m).
It focuses on orally administered drugs and its total potential market value is in excess of $300m (€205m).
Last November the company raised €8m in a funding round organised by Goodbody Stockbrokers. It is understood that prior to the latest round it had raised a total of about €20m.
- Ailish O'Hora
