Over-allotment takes Hancock Jaffe IPO to nearly $9m

The underwriter of an initial public offering by Hancock Jaffe Laboratories (NSDQ:HJLI) this week exercised in full its over-allotment option, taking the gross proceeds from the flotation to nearly $9 million.

The IPO, which priced on the last day of May, initially brought in $7.5 million for Irvine, Calif.-based Hancock Jaffe, which makes bioprosthetic implants designed to treat chronic deep vein insufficiency, heart valve conditions and coronary artery bypass grafts. The shares trade on the NASDAQ exchange under the symbol “HJLI.”

Network 1 Financial Securities, the offering’s managing underwriter, exercised the full option for 225,000 shares at $5 apiece, adding more than $1.1 million to the deal. Hancock Jaffe’s total gross from the offering was $8.6 million, the company said in a June 12 regulatory filing.

Last December the company said it planned to float nearly 1.9 million shares at $6 to $8 apiece, for gross proceeds of $11.3 million to $15.0 million, or $13.1 million at the midpoint. But in May Hancock Jaffe cut the amount of shares to roughly 1.1 million at the same price range, for gross proceeds of $6.9 million to $9.1 million; each unit would consist of a share of common stock and a warrant for another share, according to the filing. Finally, in pricing the offering yesterday, the company boosted the number of shares to 1.5 million but priced below the range at $5 per unit, for gross proceeds of $7.5 million.

In 2016 Hancock Jaffe dealt its ProCol vascular bioprosthesis to LeMaitre Vascular (NSDQ:LMAT) for $665,000 up front plus a three-year royalty of up to $5 million. The company is developing a bio-prosthetic porcine heart valve for pediatric patients.

“Most of the data and studies have been performed to support our submission to the FDA for either a first-in-human study or for an investigational device exemption, or IDE, which we plan to submit in 2019,” the company said in a regulatory filing.

Hancock Jaffe is also working on the CoreoGraft, bovine-derived CABG designed to eliminate the need for spahenous vein or radial artery harvesting. That product still requires pre-clinical and human studies for FDA approval, the company said in the filing. If those are completed the company said it plans to seek an IDE for a one-year U.S. clinical trial next year.

Lastly there’s VenoValve, a porcine valve designed to treat lower limb chronic venous insufficiency from damage to leg vein valves after deep vein thrombosis. Made for surgical insertion into the femoral or popliteal vein, VenoValve showed in pre-clinical and in vitro hemodynamic studies that it mimics native valve function.

Those results were submitted to the federal safety watchdog last year as part of a bid for first-in-human study approval, Hancock Jaffe said. The FDA recommended an additional 90-day animal study before first-in-human,  the company said.

“We are preparing to commence the additional pre-clinical trial and once completed, we expect to begin first-in-human testing and file our IDE with the FDA in 2019. Once we commence the first-in-human testing, we may seek to obtain reimbursement approval for this product candidate,” Hancock Jaffe said in a prior filing.

HJLI shares were trading at $4.67 apiece today in early activity, up 1.9% on the day but off -6.6% since their public debut.

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