Ebb & Flow

Many market watchers point to quality as the main reason for the lukewarm reception to the current class of IPOs. But it's worth pointing out that shoppers in this window have had a more tried-and-true product being pushed at the same time: follow-on paper.

Follow-ons always have been sold during IPO windows, but in the past investors were more willing to buy both high-risk IPO paper and lower-risk follow-on paper. This time, they are more cautious. While $437.8 million in IPO money has been raised thus far, $706.1 million has been raised in follow-ons since the first IPO priced on Oct. 8, including $162.2 million raised last week.

Last week's follow-ons included Tularik (TLRK/$71.4 million); HIV, pain and cancer company Progenics (PGNX/$52.8 million); and ophthalmic play Ista (ISTA/$38 million). TLRK, which is developing gene-based therapeutics for cancer, autoimmune and endocrine disorders, took only a week to sell its deal, which was bumped up by 1 million shares (see B17).

GI and neurology play Adolor (ADLR) also sold the $15.5 million greenshoe on its follow-on last week, bringing total proceeds to $119 million.

Direct public offerings are hot, too, and should be considered in assessing overall supply. Last week, women's health play Novavax (NVAX) raised $27.7 million through C.E. Unterberg. Genaera (GENR), a developer of compounds for cancer, eye and respiratory diseases, raised $8.5 million through Fortis.

G. Steven Burrill, CEO of merchant bank Burrill & Co., is not surprised at the flood of follow-on paper, and sees more to come. "Remember, some of these companies haven't been able to raise public money in three years," he said.

Meanwhile, of the seven IPOs

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