Ten months after disclosing plans to spin off its regenerative-medicine-device business through an initial public offering, Harvard Bioscience Inc. has abandoned that strategy and will instead distribute shares of the subsidiary to current Harvard Bioscience shareholders.
The plan, approved by the Holliston company’s board this week, will enable its Harvard Apparatus Regenerative Technology unit, known as HART, to operate independently with $15 million in financing from Harvard Bioscience to advance development of “bioartificial” organ parts such as replacement tracheas. Previously, the parent company planned to put about $10 million into HART, which would have raised additional funds in the IPO.
“It allows Harvard Bioscience to pursue its own strategy without having to continue to fund HART. And the shareholders get both of the stocks,” said HART president David R. Green, who has served as Harvard Bioscience’s chief executive.
Under the new spinoff plan, Harvard Bioscience investors will receive one share of HART for every four shares they hold of Harvard Bioscience in a Nov. 1 distribution.
HART hopes to become a leader in an emerging market for replacement tracheas that use plastic scaffolds seeded with the cells of patients who need airway transplants. Four of the 10 trachea transplant surgeries performed worldwide in recent years have used the scaffolds. Harvard Bioscience, which launched HART, develops tools for life sciences research.
Shares of Harvard Bioscience nearly doubled from the end of 2012 through the spring of this year on the Nasdaq exchange, as company executives embarked on a road show to explain their spinoff plan to potential investors. It initially planned to sell 20 percent of the new company to the public in the IPO, and sell the remaining 80 percent later.
But investors balked, Green said, fearing the company risked fueling market volatility by making so many shares of HART available for sale for at the same time.
“We sort of painted ourselves in a corner,” Green acknowledged. “And there was no way out. So we pulled the IPO.”
HART gained wide notice in April when doctors at the Children’s Hospital of Illinois in Peoria used its scaffold in the first successful transplant of a regenerated trachea in the United States. But the patient, a 2-year-old girl born without a trachea, died a few months later because of complications after surgery on her esophagus.
With Green moving over to lead HART, which will lease space in Harvard Bioscience’s headquarters, Harvard Bioscience said in August that it had hired life sciences executive Jeffrey A. Duchemin as its new chief executive. Harvard Bioscience has about 400 employees, while HART has about 20.