Ebb & Flow

Even after this month's blowup at Rigel (RIGL), when Phase II data for its R112 allergic rhinitis candidate did not pan out, VCs who led the company's PIPE in April 2003 still look to have made out fairly well. In fact, some VCs have shown strong returns on public companies they financed, and have an appetite for more. However, the number of companies willing to do PIPEs may be dwindling as the market matures and registered direct placements gain favor.

The premise behind participating in a PIPE versus a private round is the lowered risk profile, given that the companies are generally more mature and the stock is liquid...