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Eupraxia Pharmaceuticals Inc. stock had a lacklustre debut Tuesday after it completed the first TSX-only initial public offering by a Canadian biotechnology company in 18 years.

The Victoria-based company’s stock began trading after raising $41-million at a price of $8 per unit, consisting of one share and half of a warrant. Each warrant gives investors the right to buy a share of Eupraxia at $11.20 for five years. Eupraxia is developing a treatment for knee pain from osteoarthritis that adds a time-release polymer coating to an established anti-inflammatory steroid.

The offering encountered some difficulty and pricing was delayed after a rout in biotechnology stocks last week, their third losing week in a row, and one of the biggest outflows of funds from the sector in a year, according to Piper Sandler analyst Christopher Raymond. The company and its underwriters, Raymond James, BMO Nesbitt Burns, and Canaccord Genuity, had initially hoped to sell the stock at between $9 and $11 a share before pricing the deal last week.

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Because of the offering structure, gauging the first-day performance of Eupraxia stock is a two-step operation that requires adding the values of the share and warrant price, which are both publicly traded.

The stock traded below $7 for most of Tuesday and closed at $6.90. Meanwhile, the warrants changed hands for between 85 cents and $1, where they closed.

Add the value of one share and one half-warrant and you get a closing value of $7.40 – down 7.5 per cent from the offering’s $8 unit price.

Despite the unexceptional first day of trading, the company now has the funds it needs to conduct effectiveness trials with 240 human patients starting this year and deliver key clinical results. The bigger question still to answer is whether other biotechs will follow Eupraxia’s lead and go TSX-only, given the difficulty in drawing conclusions about the degree of the deal’s success amid turbulent market conditions.

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