Tech Transfer eNews Blog

Case Western makes bold move with start-up IPO

By Jesse Schwartz
Published: July 10th, 2019

A company founded to develop regenerative medicine technology licensed from Case Western Reserve University in Cleveland, OH, is making a bold play for capital with an initial public offering (IPO) on a Canadian exchange. The initial effort is showing success, but the CEO and tech transfer director caution that the approach may not be right for many start-ups.

NervGen Pharma, based in Vancouver, has raised about $7.5 million ($10 million in Canadian dollars) with the IPO on the Canadian TSX Venture Exchange. The two-year-old company’s lead product, NVG-291, helps treat nerve damage from spinal cord injuries. Pre-clinical non-human studies are underway now and if the company’s strategy continues to succeed, NervGen plans to initiate a clinical trial for NVG-291 beginning in 2020 under an Investigational New Drug (IND) application with the FDA.

The strategy that NervGen pursued may not be right for a lot of start-ups, but it worked in this case because of the nature of the company’s investors, says CEO Ernest Wong. The Canadian connection sprang partly from the involvement of one of the early investors in NervGen, an accomplished angel investor named Harold Punnett, DMD. After experience with multiple start-ups, he became a cofounder of NervGen because he has personal experience with the challenges of people living with spinal cord injuries and nerve damage.

Punnett had worked with colleagues on other investments in Canada and sold them on the NervGen product. Some of them needed to invest only in public companies, so the group decided to take the NervGen IPO to the Canadian exchange, Wong says.

“I firmly believe that most people in the biotech world would not have gone down this route, especially at this stage of our technology,” Wong says. “This approach might not be suitable for everyone and especially in the United States, this is not a common route. This is unusual.”

The early IPO worked because the NervGen investors were not typical retail investors, Wong says. They understood the complexity of biotech development and saw the NervGen product as a longer term hold, he explains. The investor group is composed of high net-worth individuals in a position to hold the stock longer and wait out fluctuations or poor forecasts, he says.

“If you have investors who are the more typical type who are going to sell the stock when they see a dip in price, this would not be the most appropriate choice for an innovative biotech company,” Wong says. “The fact that we had people who were convinced of the value of the technology and understood how long it might take for it to reach its full potential, that was a big part of what made a public offering the right strategy.”

A detailed article on the early-stage IPO appears in the June issue of Technology Transfer Tactics. For subscription information, CLICK HERE.

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