BioCentury
ARTICLE | Finance

Lock-ups: No fear

September 5, 2000 7:00 AM UTC

A few years ago, the expiration of the 180-day lock-up on insider shares following an IPO was a surefire sign that a company's stock would go down, as venture investors got their first opportunity to sell out of generally illiquid stocks. While the situation has improved in this bull biotech market, companies coming off lock-ups still face about a 50-50 chance that their stock prices will fall in the two weeks before and after the lock-up ends.

For four U.S. IPOs completed in the first three quarters of 1999, three traded up in the week prior to the expiration of their lock-ups, when other investors used to sell ahead of the event, while only one traded down (see "Lock-up Performance"). In the week after the end of the lock-up, two were up and two were down...