BioCentury
ARTICLE | Strategy

The Lure of capital

January 16, 2006 8:00 AM UTC

Last week's reverse merger of Micromet AG into publicly held CancerVax Corp. provides the German cancer play with an estimated $40-$50 million in cash - in the top half of what companies at its stage of development are getting in IPOs these days. But the com-bination's pre-close valuation of $127.9 million falls near the bottom of the range seen in recent IPOs by Phase II companies. One of the new-co's first tasks will be to get its valuation to a level that reflects the value of the combined entity and rewards investors for the more than $260 million they have poured into the two companies since 1993.

These calculations are based on CNVX's market cap before the deal, and the valuation might look different by the time the deal closes in the second quarter. Average post-IPO valuations in the U.S. and Europe for such companies in the recent window were $243.1 million and $272.2 million, respectively (see "IPO in Disguise," A2 ). ...