Icagen, a drug-development company that needs more money to pay for further research on experimental medicines, plans to sell as much as $2.6 million worth of its stock.
The Durham company disclosed in a filing with the Securities and Exchange Commission today that it hired McNicoll, Lewis & Vlak, a New York investment bank, to handle the sale.
McNicoll will receive a 7 percent commission for shares sold, and Icagen reported in the SEC filing that it expects its total expenses will be about $100,000. Selling new shares dilutes the value of existing ones, but Icagen is hoping to avoid rattling investors by hiring an investment bank for the transaction.
Icagen shares fell 3 cents today to $1.61.
McNicoll also employs Christopher James, the only Wall Street analyst that now tracks Icagen's stock.
"It's more common than not for companies to use investment banking services from firms that also provide coverage," said Richard D. Katz, Icagen's chief financial officer.
James, who rates Icagen's stock as "hold," wasn't immediately available for comment.
Icagen shares began trading publicly in 2005, but fell sharply as the company ran into problems getting experimental drugs through the regulatory process and investors fled.
In September, Icagen held a reverse stock split, essentially exchanging eight existing shares for one new share. The move was designed to increase the per-share price above $1 and avoid being delisted from the Nasdaq.
As of Sept. 30, Icagen had about $11.7 million of cash. Since then, Icagen has gotten fresh funding from other sources, bolstering its cash reserves.
The company has received $4 million in payments from larger partner Pfizer, as part of an agreement to develop new types of pain treatments. In November, Icagen also received $733,000 in federal grants.