In the ballpark… or not

3Q Financial Markets ReviewIn the ballpark… or notEvaluating the extent of IPO haircuts involves some guesswork, as companies are entering a market in which their fundamentals should be valued against comparable names. Although there are reasons why already public companies may be valued at a premium - portfolio managers may be more familiar with management, for example - over time one would expect comparable companies to have comparable valuations.To illustrate, BioCentury created peer groups for six IPOs from the recent window, and plotted their hoped for valuations, their actual post-money market caps, and their after-market performance.

Cytokinetics (CYTK) is one of the few that priced at the top of its original price range, and indeed has accelerated away from its peer group, which includes 29 cancer companies with lead products in Phase II. CYTK has its SB-715992 in Phase II with partner GlaxoSmithKline, and is using its cytoskeleton platform to pursue cardiovascular disease and fungal infections as well as cancer...