One of today’s biggest market sensations is Zura Bio Limited (NASDAQ:ZURA). The clinical-stage biotechnology firm recently completed a merger with JATT Acquisition Corp, a special-purpose acquisition company (SPAC). Following a successful shareholder vote on March 16, ZURA stock began trading on the Nasdaq yesterday.
The newly formed company made its trading debut on Tuesday, March 21, and closed the day down 11%. Since then, however, it has truly skyrocketed, rising more than 300% despite multiple trading halts being imposed by the Nasdaq. However, the stock also boasts a surprisingly low float of roughly 5 million shares, causing some investors to eye it with skepticism.
What’s Happening With ZURA Stock
It’s not unusual for a newly merged deSPAC to enjoy impressive gains after its initial public offering (IPO). Additionally, companies that go public through a SPAC merger can sometimes have a low float percentage. Today, speculative investors have been closely watching ZURA stock as it shoots up. However, some have expressed concern regarding a shareholder disclosure. Per the company’s 8K filing:
“As a result of a a share distribution by Hana Immunotherapeutics LLC (“Hana”), Hana will own 5,404,274 Class A Shares of the post-combination company. Willow Gate LLC (“Willow”) will own 2,702,623 Class A Shares and Stone Peach Properties LLC (“Stone Peach”) will own 2,701,543 Class A Shares. The shares held by Willow and Stone Peach will not be subject to the lock-up restrictions.”
As two key investors are not facing a lock-up period, they have nothing stopping them from offloading their ZURA stock holdings. Were they to start selling, the stock would fall, but it would also lead to a higher float percentage.
This shouldn’t necessarily be seen as an indication of how ZURA stock will perform in the long term. Seeking Alpha reports that Zura is currently undergoing clinical testing for two drug candidates that treat disorders, including alopecia areata, diabetes, and asthma. The current “biotech gold rush” means there will be plenty of opportunities for new companies in the space.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.