Bay of pigs? By Eric Pierce
& Shaun Brown
Staff Writers

Underscoring investor demand for Internet issues, a single follow-on by eBay last week raised nearly 75 percent of the total funds raised by all publicly held biotech companies worldwide in the first quarter of the year.

eBay, the online auctioneer, raised $722.5 million, pricing 4.25 million shares at $170 per share. In contrast, it took 54 biotechnology companies to raise $965.6 million in IPOs, follow-ons and other offerings in the first quarter. The total value of "stock moved" in eBay's offering was $1.1 billion, as selling shareholders cashed out of 2.25 million shares on top of the shares sold by the company. eBay raised $62.8 million in its IPO in September 1998. Friday's close of $176 values eBay at $22 billion. To put it in context, biotech bellwether Amgen (AMGN) is valued at $34 billion.

Given the nascent nature of Internet commerce, and in particular the online auction industry, it may come as no surprise that eBay dedicates nearly 14 pages of its prospectus to explain "risk factors" facing its business. In addition to its reliance on uninterrupted telecommunications transmissions, the morality of its clientele, eBay is also susceptible to the vagaries of California's tectonics. The company noted that its hardware in Santa Clara, Calif., is vulnerable to "damage or interruption from earthquakes, floods, fires, power loss, telecommunication failures and similar events.

According to the prospectus, other risk factors include:

- "Our future success, and in particular our ability to facilitate trades successfully and provide a high quality customer service, will depend on the efficient and uninterrupted operation of our computer and communications hardware and software systems."

- "We have received in the past, and we anticipate we will receive in the future, communications alleging that certain items listed or sold through our service by our users infringe third party copyrights, trademarks and trade names or other intellectual property rights."

- "Our future success will depend largely upon sellers reliably delivering and accurately representing their listed goods and buyers paying the agreed purchase price. We do not take responsibility for delivery of payment or goods to any user of our service."

Speaking of possible auctions . . .

Advanced Polymer Systems (APOS) has engaged Warburg Dillon Read to evaluate strategic alternatives including the possible sale of the company. APOS, which develops polymer-based delivery systems used in ethical and over-the-counter drugs and personal care products, earned $1.9 million ($0.10) on revenues of $20 million in 1998. Friday's close of $5.688 values the company at $106.4 million.