Ebb & Flow

Affymax (AFFY) has checked off each of the three boxes for a blockbuster IPO: selling shares above the proposed price range, selling more shares than had been proposed, and trading up - way up - in the aftermarket. While the company may have left money on the table, it did what all seasoned investors recommend, leaving upside for the buyers.

The deal sold 3.7 million shares at $25. That raised $92.7 million and valued the company at $355 million.

AFFY helped its own cause earlier in the week with positive Phase II data for anemia compound Hematide, a peptide-based erythropoiesis-stimulating agent in development with partner Takeda(Tokyo:4502) (see B13).

The company originally filed this summer to raise up to $115 million, then amended the deal in November to sell 3.5 million shares at $22-$24 through underwriters Morgan Stanley; Cowen; Thomas Weisel; and RBC Capital.

The IPO priced late Thursday and the stock surged $8.88 (36%) to $33.88 on 2 million shares on Friday. While it's possible that AFFY and its bankers could have priced the shares north of $25, Nicholas Galakatos told Ebb & Flow that "it serves everyone well to be disciplined. The bankers did a very good job in exercising that and the company also was disciplined in how much it wanted to raise and at what price."

Galakatos, AFFY's lead director, is managing director at Clarus Ventures and a general partner of MPM's MPM Bioventures II and III funds, the former of which invested in AFFY when the biotech was still private.

From the buyside perspective, Evan McCulloch of Franklin Templeton noted "the underwriters appear to have done a good job placing the deal because the first-day volume is not actually that high. The deal was placed with people that intend to hold the stock. Thus, there was somewhat of a scarcity value."

Thus, McCulloch said the success of deals like AFFY and autoimmune and cancer company Trubion (TRBN) should

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