Ebb & Flow

After rushing to the SEC to file S-1s, bankers are taking a wait-and-see approach before actually marketing biotech IPOs. That's because no one wants to be the first to test the waters. A weak response could have a chilling effect on other deals, and no banker wants to have a deal get pared down, fail to trade up in the aftermarket, or - even worse - get pulled.

The good news is nobody really sees the latter happening, because this rally has all the right ingredients for an IPO window. "Number one, you have momentum, and number two, you have outside money coming into the sector," said David MacCallum, a long-time biotech banker who now runs a hedge fund called Outer Islands Capital. "It's coming from specialist funds and it's coming from broad-based funds. You can't build a window on the stamp collectors or esoteric investors like myself." ...