‘Wak’ shares plunge

IPO bloodbath after shady founder bails

The newly public biopharmaceutical company launched by inside trader Sam Waksal (inset) had better come up with a drug for investor chest pains.

At its initial public offering Wednesday, shares of the shady entrepreneur’s Kadmon Holdings LLC opened low and sank still lower, further decimating the holdings of pre-IPO investors who bought in at private sales for far higher prices.

“I am a mess,” one investor, a retiree, said of her once hundreds of thousands of dollars in Kadmon shares — half her retirement nest egg — that are now worth a small fraction of that.

Kadmon debuted in an initial public offering Wednesday at $11.55 a share and plummeted, closing at $9.76, a drop on the day of 15 percent.

“It would have to go up to $138 a share for me to break even,” said the retiree, who started buying Kadmon stock on her broker’s recommendation four years ago, in her early 60s, at $21.24 a share. And her shares were hit by a 6.5-to-1 “reverse split” before the IPO.

She and other investors had been lured by Waksal’s reputation as a biotech genius into thinking his new company would be a success.

Instead, it’s mired in $218 million of debt.

“I met with Sam personally before I invested in this, more than two years ago,” said another investor, Joe Macaluso, head of the Macaluso Group, a New Jerseybased medical-claims processing company.

“I had lunch with him. On papers, in his charts and graphs, everything looked like the stars had aligned.”

Still, Macaluso said he realized that the company was “high risk.”

“I knew going in that you have the possibility of losing everything or making big numbers,” he said.

Waksal served five years in prison for insider trading after sharing stock tips on his previous biotech company, ImClone Systems, with well-heeled pal Martha Stewart, serving time in the scheme.

As an ex-con barred from serving as an officer in a publicly traded company, Waksal recently bailed out of Kadmon — and as his investors twist in the wind, his own golden parachute is worth as much as $25 million.