China Nuokang Bio-Pharmaceutical (NSDQ: NKBP) priced its IPO at $9, which was slightly below the expected range of $10-$12. When the shares began trading Thursday, they fell further, dropping 56 cents to $8.44, a loss of about 6%. The company receives 94% of its revenues from a single product, the hemocoagulant Baqueting, which is derived from the venom of the pit viper.
In the first nine months of 2009, China Nuokang booked $29.3 million in revenue and net income of $6.1 million. If its sales continue at more or less the same rate, it could see a full-year net income figure of $8.5 million, or a price/earnings ratio of just below 20.
The company is seeking to diversify its revenue stream. Its portfolio totals fourteen products, including Aiduo, a cardiovascular stress imaging agent, and Aiwen, an anti-arrhythmic drug. It says it will use $14 million of the proceeds to acquire new technologies, drugs or companies.
China Nuokang received almost $39 million from the offering. A selling shareholder received another $4 million
After the IPO, there are 157.5 million ordinary shares outstanding, or the equivalent to 19.7 million ADSs (each ADS equals 8 ordinary shares). That gives China Nuokang a market capitalization of $166 million.
Before the transaction, China Nuokang had $12 million in cash. The IPO will take that up to $51 million.
The company said it would use the proceeds as follows:
- approximately $14 million to fund the acquisition and in-licensing of new technologies, products or companies;
- approximately $5 million to fund the research and development of our product candidates and the expansion of our product pipeline, including clinical trials, of which approximately $0.7 is expected to be used to develop the manufacturing process of dipyridamole aspirin sustained release capsules, $1.2 for Phase II and Phase III clinical trials of hemocoagulase derived from the venom of the snake species Agkistrodon acutus, $0.7 for preclinical trials of adenosine for myocardial protection, and $1.9 for preclinical trials of lanthanum polystyrene sulfonate;
- approximately $5 million to fund the improvement of our production systems, the expansion of our production facilities and the enhancement of our production lines;
- approximately $8 million to fund the expansion and enhancement of our sales and marketing network; and
- the balance for general corporate purposes.