Biotech Startup Uses Workaround to Speed Up IPO Despite Shutdown

(Bloomberg) -- As the U.S. government shutdown drags into its 34th day with little hope of a swift conclusion, companies are starting to find ways to get around the barriers it’s put up.

Gossamer Bio Inc., a biopharmaceutical firm that filed in December for an initial public offering, set terms for the listing on Wednesday despite not being able to interact with the market regulator as usual. The San Diego-based company will sell 14.4 million shares for $16 a piece, skipping the price discovery process and instead making the IPO automatically effective after 20 days.

While it gets round the shutdown -- companies usually need sign-off from the Securities and Exchange Commission to start trading -- the unusual move doesn’t come without risks, which could include “a stop order issued preventing use of the registration statement, and a corresponding substantial stock price decline, litigation, reputational harm or other negative results,” according to Gossamer’s amended filing.

But it’s not all bad.

“One thing I really like about this is maybe companies and underwriters will change behavior and commit to a price up front so all the math in the prospectus will be complete,” said Rett Wallace, chief executive officer of Triton Research Inc., which specializes in IPO research. “The preliminary prospectus, with a price range and all the key capitalization math still ‘TBD,’ strikes me as a major shortcoming in the current common practice.”

©2019 Bloomberg L.P.