BioPharma, Policy

Gossamer Bio goes public despite government shutdown halting most SEC operations

It was reported earlier this week in The Wall Street Journal that, while an IPO without the SEC signing off is allowed with a certain workaround, it is carries legal and regulatory risks.

A company that was reported to be exploring a legal workaround enabling it to trade its shares on the public market without the Securities and Exchange Commission’s go-ahead has commenced its initial public offering.

San Diego-based Gossamer Bio said Wednesday that it had issued an IPO of about 14.4 million shares at $16 per share, trading on the Nasdaq under the symbol GOSS. The company said in a Form S-1/A filing Wednesday that it anticipates raising between $210.8 million and $242.9 million in the IPO, having stated in its Form S-1 that the proposed maximum aggregate offering price would be $264.5 million.

Gossamer had filed to go public last month, but due to the government shutdown – now the longest in the nation’s history, at 33 days and with no end in sight – the Securities and Exchange Commission is unable to sign off on IPOs.

According to a plan for the shutdown released in December, while the SEC’s online database will remain operational because it is operated under a contract, other divisions of the agency will be unable to process filings, provide interpretive advice, issue no-action letters or conduct other activities. “As a result, new or pending registration statements or applications for exemptive relief will not be processed regardless of the status of any review of those filings,” the plan read.

In response, the agency has said that companies that have filed to go public can alter the language in their filings to make the IPOs automatic after 20 days. That, the Wall Street Journal reported Monday, citing unnamed sources, is what Gossamer and another company, TCR2 Therapeutics, have looking into doing. TCR2 filed its Form S-1 on Dec. 28, but at press time had not yet commenced selling shares on the market. The Cambridge, Massachusetts-based company’s proposed maximum offering price is $100 million, according to the filing.

However, there are also significant risks of legal and regulatory challenges when companies use the workaround, especially if the filings have any problems, the newspaper reported, which has made the Nasdaq resistant to the approach of Gossamer and TCR2.

Gossamer drugs in clinical development include GB001, a DP2 antagonist in Phase II development for respiratory diseases and chronic skin rash; GB002, a PDGF receptor kinase inhibitor in Phase I development for pulmonary arterial hypertension; and GB004, an HIF-1a stabilizer in Phase I development for inflammatory bowel disease.

Photo: jxfzsy, Getty Images

Shares0
Shares0