And an IPO window is an even more distant panacea…


…as evidenced by two IPOs that went out in 2010, with substantial haircuts:

Anthera Pharmaceuticals, reported in WSJ:

Anthera Pharmaceuticals Inc. ended its first day of trading nearly flat after six million shares were priced at $7 each in its initial public offering.

Shares of the unprofitable pharmaceutical company, which hasn't yet obtained regulatory approval for any of its treatments, rose one cent to $7.01 on the Nasdaq Stock Market. The price was half of the original plans for 4.6 million shares for between $13 and $15 each. It later last week backed down to $8 to $9 after a lack of interest. 

and

Ironwood Pharmaceuticals, reported on Bloomberg:

Ironwood Pharmaceuticals Inc. cut the size of its initial public offering by 30 percent in the biggest price reduction for a U.S. IPO this year.

Ironwood, which is developing a treatment for chronic constipation and irritable bowel syndrome, sold 16.7 million Class A shares at $11.25 each yesterday, Bloomberg data show. The Cambridge, Massachusetts-based company sought $14 to $16 a share, according to its Jan. 20 filing with the Securities and Exchange Commission. The $188 million IPO gives the drugmaker a market value of $1.1 billion, and it will start trading today on the Nasdaq Stock Market under the ticker IRWD.

 

But what is interesting is to compare these with the fortunes of Apatech, which this week reached agreement with Baxter to be acquired for $330 million. Unlike development stage (and cash burning) Anthera and Ironwood, Apatech had product sales of $60 million in 2009. Would Apatech have done any better in an IPO? In this environment, may be but questionable. But the key is this – Have products and sales; will travel. Now, there's a panacea worth considering…

 

This post is by Raman Minhas. He is CEO of ATPBio, a consultancy firm providing strategic insight and transaction support to the life sciences industry.

 

 

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