Vascular Biogenics issued shares in its $65 million IPO last week but after 6 days of trading on the Nasdaq, the company cancelled the offering and all trades were reversed.
This bizarre situation resulted from the refusal of a standby purchaser, its largest shareholder, to purchase up to $30 million of the offering. When other buyers refused to fill the hole, the underwriters had no choice but to cancel the deal.
The purchaser, a former Goldman Sachs banker, apparently thought that the offering would receive greater public buy in, reducing his obligation. The underwriters believed that they could cancel the offering as it hadn’t settled by the time they pulled the plug.
Vascular Biogenics, like many biotechs, hasn’t made a profit in 14 years and has a $100 million stockholders’ deficit.