Aldagen revives IPO plans to raise $80.5 million

A small Durham company developing drugs using stem cells is reviving plans for an initial public offering of stock, hoping to take advantage of renewed Wall Street interest in biotechnology IPOs.

Aldagen scrapped previous IPO plans in Oct. 2008 when the stock market slumped and investors shunned risky, unprofitable companies. But stocks have surged since March and IPOs are returning to favor.

This morning Aldagen, which was founded in 2000 as StemCo Biomedical, refiled IPO plans with the Securities and Exchange Commission.

The filing is missing some key details, such as the expected price range. But Aldagen indicated it expects to raise as much as $80.5 million and its shares to trade on the Nasdaq under the symbol "ALDH."

Aldagen's chances on Wall Street this time will depend largely on the health of the broader stock market and if investors are willing to bet on the company's long-term prospects, said John Fitzgibbon, publisher of IPOScoop.com.

"These things are purchased by investors looking for lightning in the bottle down the road," he said.

Filing for an IPO isn't cheap, especially for a small company burning through cash as its tests and develops experimental medicines, so a second SEC filing shows Aldagen officials are serious. "If they get out the door, it could be a flag bearer for other biotech companies interested in IPOs," Fitzgibbon said.

Aldagen's most advanced product is aimed at improving umbilical cord blood transplants used to treat metabolic illnesses in pediatric patients. Another drug would treat critical limb ischemia, where severe obstruction of the arteries decreases blood flow to hands, feet and legs.

As with many small drug-development companies based in this region, Aldagen is losing millions of dollars a year, and has been supported mostly by venture-capital financing. The company lost $10.2 million last year.

A successful IPO would allow its investors, including local venture firms the Aurora Funds and Intersouth Partners, to begin cash out their stakes. It would also give the company money to finish testing its products and seek regulatory approval.

The company now employs 24. CEO W. Thomas Amick wasn't immediately available for comment. Typically, company officials are restricted in what they can say once an IPO filing is made because of SEC regulations.