You have to give San Diego-based Gossamer Bio credit for the way it’s adapted its plans for an initial public offering (IPO) to deal with the government shutdown. The company launched in 2018 with $100 million in financing. It raised another $230 million since then. Then, it initially filed with the U.S. Securities and Exchange Commission (SEC) for its IPO on Dec. 21, 2018, the day before the U.S. federal government shut down.
With the government shutdown, the SEC’s automated website was accepting IPO registration, but review wasn’t occurring. As the shutdown dragged on for a record 35 days, a number of companies that had filed IPOs began considering alternate approaches using a loophole. One such approach was to change the language of the registration filing and skip over the rest of the SEC review, going directly to market. The company picks its IPO prices and waits 20 days. Then the listing is fixed at that price.
The approach isn’t without its risks, but during the shutdown, with President Trumpthreatening that the shutdown could last “months or even years,” companies were trying to make plans amidst all the uncertainty.
On Jan. 23, Gossamer filed for the alternate IPO path. In it, the company proposed selling about 16.5 million shares, as well as about 2.2 million shares to underwriters, at $16 each. That path locked the price for 20 days. However, two days later, Trump agreed to open the government for three weeks.
On Jan. 30, Gossamer Bio announced it had filed an amended Form S-1 with the SEC, restoring the amended language and picking the traditional pathway. The IPO terms are unchanged, but it is requesting accelerated review of the IPO paperwork to allow it to go public before the 20-day date its amended offering would have automatically become effective.
Of the 20-day alternate pathway, Vasilios Kofitsas, managing director of Boston-based Back Bay Life Advisors, told Xconomy, “There’s certainly risk from a company perspective should you go this route and price successfully and the SEC comes back and notices it has issues with lack of disclosures, for example. Also, there is market risk: investors have to be really comfortable with your disclosures as well. This is a risk you don’t take in a traditional IPO, since it has been cleared by the SEC, for all intents and purposes.”
Gossamer Bio plans to use the funds raised from the IPO to advance its clinical trials, including one for its lead candidate, GB001. GB001 is an oral therapeutic for a difficult-to-treat type of eosinophilic asthma. The drug, a DP2 antagonist, is also being developed as a potential treatment for chronic rhinosinusitis with nasal polyps and chronic spontaneous urticaria. Phase II trials are planned for both later indications, while a Phase IIb is currently in progress for eosinophilic asthma.
Gossamer also has GB004 that came out of a deal with Aerpio. GB004 is an HIF-1 alpha stabilizer being developed as a potential therapy for inflammatory bowel disease.
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