12:00 AM
 | 
Oct 06, 2003
 |  BioCentury  |  Finance

Ebb & Flow

Those readingID Biomedical's press release justifying its decision to pull its follow-on on Friday might have asked what happened to the bull market for biotech. Since filing the deal on Sept. 25, IDBE said it had "seen a significant decline in the biotechnology sector."
Indeed, the BioCentury 100 shed 10.5% the week the company filed, but IDBE had held up relatively well given the 5 million share overhang. The day prior to filing, its NASDAQ price was $19.79, and it had fallen $3.37 (17%) to $16.42 by last Thursday's close, before announcing it was pulling the deal.
While that's nearly double the 8% average haircut for follow-ons sold through July of this year, IDBE's shares still are up $10.07 (151%) for the year on NASDAQ.
Digging a little deeper shows that the deal didn't get done because the company decided there would be too much dilution, and thus its decision shouldn't be taken as a red flag that demand is waning. "Obviously it was our desire to get a transaction completed, but it needed to make sense for our current shareholders," said spokesperson Dean Linden. "At the prices being discussed, it did not make sense to proceed."
CIBC's Peter Crowley agreed that price sensitivity drove the withdrawal, not lack of demand. "They had put us on notice that they wanted to sell stock at a given price, and they didn't want to be on the road that long. It doesn't speak to the demand of the broader market, it just tells me that there's some price sensitivity out there."
Supporting the demand argument, the BioCentury 100 snapped back to gain 4.6% last week.
Crowley also noted that the Vancounver company was somewhat hamstrung by its lack of visibility in the States. Even with its NASDAQ listing, he said, "the company is much better known in Canada and Europe. It was really like marketing an IPO, but with a higher valuation." IDBE now stands valued at $601.3 million.
IDBE has a cash cushion, so it did not need the money now. Linden said its C$40 million (US$29.6 million) will last "well in excess of two years." In addition, with its FluNsure influenza vaccine entering field testing later this month and the opportunity to raise money through a partnership for the compound, the company has other avenues to get cash.
The stock got back a little on Friday - adding $0.33 to $16.75 on 915,529 shares - and was up $1.30 on the week.
A good quarter

Anyone needing to be reminded about biotech's momentum needn't look much farther than the third quarter funding totals. The industry put $6 billion in its tank during the 13 weeks ended last Tuesday, bringing the 2003 total to $12.3 billion. More notable is that it took less than three quarters for the group to eclipse the $11.5 billion raised in all of...

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