Testing demand

It would be easy to look at the nearly $1 billion of biotech paper that Wall Street priced last week and declare that the biotech window has been thrown open. But a closer look at the types of deals getting done tells a different story: the fully underwritten market for IPOs and follow-ons remains largely untested.

Indeed, if one includes the $100 million raised by cardiovascular play CV Therapeutics Inc. (CVTX), 100% of last week's $967.7 million in financing came from converts and PIPEs. Converts alone accounted for $800 million of the total.

While CVTX (Palo Alto, Calif.) had SG Cowen as an underwriter, it was really a direct placement of shares from a previously filed shelf offering.

Adding uncertainty to the demand picture is whether Wall Street is simply trying to make up for lost time. The flurry of financing comes after a dearth of banker activity, in which self-managed PIPEs have become the norm. One has to go back to March 20 to find the last U.S. follow-on, in which Regeneron Pharmaceuticals Inc. (REGN, Tarrytown, N.Y.) raised $162.5 million. The last U.S. IPO dates back even further to March 7, when Seattle Genetics Inc. (SGEN, Bothell, Wash.) garnered $49 million. Thus the larger question remains of whether there is some real sustainable buying power in the market.

In Europe,

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