Where to play the game

European companies have two basic choices of where to list when they go public: they can go to their local exchange or to NASDAQ in the U.S. Conventional wisdom says European companies should go public on their local exchanges, as companies choosing the U.S. risk getting lost among the crowd, a particular danger for smaller European companies. But staying home can mean trading on a smaller and less visible exchange.

The experience of Flamel Technologies S.A. illustrates that European biotech companies can do well on NASDAQ, while the counterpoint of Actelion Ltd. shows that international investors will happily go to national European exchanges to invest in successful companies. Thus both strategies work, and in the end quality counts.

FLML's ability to raise money was the result of three converging events. First, the company recently showed proof of concept for its drug delivery technology in a Phase I trial of Basulin controlled-release human insulin to treat diabetes. Second, in August the company struck a deal with Bristol-Myers Squibb Co. (BMY, Princeton, N.J.) covering worldwide rights to Basulin (see BioCentury, March 31 & Sept. 1). At the same time, the opening of the funding window in the U.S. has allowed U.S.-listed companies to access capital from the public markets.

Leaving aside FLML, a total of 15 European companies have been able to access capital from the European public markets this year, for a total of $314 million. But a third of that amount was in a single deal: Actelion's $107 million convertible debt offering. Actelion (SWX:ATLN, Allschwil, Switzerland) achieved profitability this year on sales of its lead product, Tracleer bosentan to treat pulmonary arterial hypertension (PAH).

Thus, given the demise of high-growth stock exchanges like Germany's Neuer Markt and EASDAQ in continental Europe, and the lack of visibility on when or how much

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