12:00 AM
Apr 12, 2004
 |  BioCentury  |  Finance

Ebb & Flow

IPO windows tend to stay open only so long as investors can see some upside from offering prices. Thus neurology company Memory(MEMY) and gastrointestinal company Santarus(SNTS) did their bit to maintain the window by taking significant haircuts on their prices over the past two weeks. Shares of both companies then rose in trading.

MEMY had been hoping to sell its shares at $13-$15 and ended up doing the deal at $7. SNTS's price range was $11-$13 and the company priced at $9. While SNTS took a smaller haircut, it also lowered the number of shares sold to 6 million from 7.1 million.

The good news, however, is that SNTS now sits in the middle of its proposed range and MEMY is on the way to its mid-range. SNTS added $0.96 on the week and closed Thursday at $12.33, putting it up 37% since it raised $54 million in an IPO the prior Wednesday. Banks on the SNTS deal were SG Cowen; UBS; Thomas Weisel Partners; and RBC Capital Markets.

MEMY popped $2.02 (29%) to $9.02 on the week. On Monday, the company raised $35 million in its IPO. Underwriters were UBS; SG Cowen; Banc of America; and Fortis.

"If you can't get a deal done at the price on the cover, you go to the key accounts and ask where they like the price - that's typically where you do the deal," said Jeffrey Barnes, general partner at Oxford Bioscience Partners, which is an investor in MEMY. "It may turn out that the market prices it much higher, but it would be very hard to fill the book at that price."

It's hot in India

Pops in the after-market weren't limited to companies that took haircuts. Indeed, the biggest gain was posted by India's Biocon, which sold its IPO at the top of its proposed range and then soared 54% to Rs 484.1 on 4.8 million shares in its debut last Wednesday on the National Stock Exchange in Mumbai - its first trading day since it raised $70 million in an IPO through the sale of 10 million shares at Rs315 on March 25. The enzyme and protein manufacturer continued the uptick and closed the week at Rs 581.2, up Rs266.2 (85%) (see Strategy, A6).

April (S-1) showers

Indeed, Xcel's withdrawal of its IPO late on Friday was the lone blemish on an otherwise upbeat IPO week, as four more companies threw their hats in the ring: Favrille, Icagen, ViaCell and Celldex, a spinout from Medarex(MEDX).

Favrille hopes to raise up to $ $86.3 million in an IPO underwritten by Piper Jaffray; Needham; William Blair; and First Albany. Earlier in the week, the cancer vaccine developer topped up with a $44 million series C round led by William Blair Capital Partners.

The company's FavId has completed enrollment in a Phase II trial to treat non-Hodgkin's lymphoma (NHL). The compound is a patient-specific NHL idiotype protein conjugated to KLH immunostimulatory protein. Favrille plans to start Phase III testing in the third quarter.

Favrille's 2003 operating loss was $13 million and the company had $5.6 million in cash at year end. Including last week's financing, the company has more than four years of cash.

Principal stockholders...

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