CLSA in the San Diego Union-Tribune: Public stock offerings hit by partial government shutdown
By Bradley J. Fikes | San Diego Union-Tribune
Jan. 25, 2019
A financial windpipe for growing companies — the ability to raise money through stock offerings — is increasingly constricted by the partial government shutdown, industry experts say.
Regulatory officials who accept applications and interact with companies are largely not working, although vital activities continue at agencies such as the Food and Drug Administration.
While the danger pertains to any company, those in life science are especially at risk, said Mike Guerra, president and CEO of the California Life Sciences Association.
“Such absences could have negative consequences on activities such as initial public offerings (IPOs), rulemaking, approvals of filings and registrations, review of life sciences-related transactions at the Committee on Foreign Investment in the U.S. (CFIUS) and more,” Guerra said by email.
Life science companies require large sums of money as they develop products and place them into extensive clinical trials, Guerra said. The FDA, which governs clinical trials, is no longer accepting applications for drug approvals.
“Staff at other agencies relevant to life sciences such as the Securities & Exchange Commission (SEC), Department of Treasury, Department of Justice, and Department of Commerce have largely been furloughed,” Guerra said.
At least one life science company, San Diego’s Gossamer Bio, is going ahead with IPO plans despite the shutdown. Gossamer Bio announced the IPO on Wednesday.
Gossamer is offering 14.375 million shares at $16 each for $230 million. Offering underwriters have a 30-day option to buy an extra 2,156,250 million shares.
Gossamer made its filing by altering a previous IPO document, according to the San Diego Business Journal. The altered filing will be effective Feb. 12. That runs the risk that once the SEC resumes normal functioning, it might raise objections.