James E. Flynn‘s Deerfield Management has revealed holding shares of Auspex Pharmaceuticals Inc (NASDAQ:ASPX), a company that went public today, on February 5. Deerfield reported ownership of around 1.29 million common shares, held via class E preferred stock. The securities can be converted into shares of common stock on the basis of 0.222 shares of Common Stock per one unit of Preferred Stock.
According to the terms of the IPO, Auspex Pharmaceuticals Inc (NASDAQ:ASPX) intended to sell 6.0 million shares at a price of $12 apiece. In this way following the IPO, the preferred stock of the company will be converted and the total amount of outstanding shares amounts to around 21.53 million. The net proceeds from the offering are planned to be used for the development of Auspex’s SD-809, a novel drug discovered by the company, and for which it holds worldwide rights. The drug is the main product of the company, and since it has not been approved by the FDA it represents a major risk that will severely impact Auspex Pharmaceuticals Inc (NASDAQ:ASPX)’s business.
Despite the risk associated with the weak financial results and the company’s dependence on a single product, the IPO was well received by the market, the stock of Auspex Pharmaceuticals Inc (NASDAQ:ASPX) gaining around 18% in the morning trading.
Aside from Auspex Pharmaceuticals Inc (NASDAQ:ASPX), Deerfield reported recently about another biopharmaceutical “emerging growth” company that went public a couple of days ago, Dicerna Pharmaceuticals Inc (NASDAQ:DRNA). The fund reported holding around 2.12 million shares, which have been obtained through the conversion of the preferred stock held previously to the IPO and the acquisition of additional units of common stock.
Both investments disclosed lately by Deerfield, Auspex Pharmaceuticals Inc (NASDAQ:ASPX) and Dicerna come in line with the fund’s targets. Deerfield prefers to focus on healthcare companies and funds Research & Development among other things.