Biotech Values

[DewDiligence]

Biotech IPOs continue to slash offering price:

[EYET has turned out to be one of the rare exceptions this year.]

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2004/05/27/BUG4B6S8D21.DTL

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Biotech IPOs cut back
Wealth of offerings has caused some to scale down prices

- John Shinal, Chronicle Staff Writer
Thursday, May 27, 2004

With at least three biotechnology startups expected to go public this week and more IPOs in the pipeline, the glut of offerings is beginning to affect the pricing of new biotech shares.

In fact, two startups whose shares are expected to begin trading today had to cut the price of their initial offerings by nearly half to complete the deals.

Their experience could put a damper on the fund-raising plans of other biotech startups that have filed to go public but are not yet actively marketing their IPOs.

Acadia Pharmaceuticals of San Diego, which develops drugs for diseases of the nervous system, and Critical Therapeutics Inc. of Lexington, Mass., a developer of asthma treatments, both completed their offerings late Wednesday at a price of $7 per share. [Acadia closed down 4% and Critical closed up 1% on the first day of trading today.]

According to the companies' regulatory filings, Acadia has hoped to get between $12 and $14 per share, while Critical listed an initial price range between $11 and $13. The companies' IPOs raised only about half what they were hoping for, with Critical Therapeutics raising $42 million and Acadia $35 million.

Alnylam Pharmaceuticals of Cambridge, Mass., which is developing ways of identifying disease-causing genes, is also selling shares to investors this week, and the big money management firms that buy IPO shares "are having to be coaxed into these deals," said an investment banker whose firm is involved in the Acadia IPO.

While some biotech firms have seen their shares surge after recent IPOs, the shares of others have fallen in the public markets. That has made mutual fund managers, still skittish after the bear market of 2000-2003, even more cautious, said the banker, who spoke on condition of anonymity.

Early-stage companies like Acadia and Critical face growing competition for investor attention as the number of biotech firms selling IPO shares has surged.

Six such companies backed by venture capital investors completed IPOs in the first quarter, according to the National Venture Capital Association.

As early-stage companies, both Acadia and Critical had less than $1 million in revenue for the three months ended in March. Neither company returned a phone call seeking comment.

Some companies have found a warm reception. Shares of the cancer-drug- maker Pharmion, which began trading in November at $11 per share, closed at $37.75 Wednesday. [It helps that the company’s drug got approved by the FDA!] The firm had a loss of $60 million on revenue of $25.5 million for the year ended in December.
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