Ebb & Flow

Last week's IPO by Coley (COLY) was the first U.S. biotech IPO to price at the top of the range and then trade up in the aftermarket since small molecule company Theravance (THRX) in October 2004. Investors told Ebb & Flow the reasons had as much to do with the company as with market conditions.

The key is that the company has shown proof-of-principle of a platform that has the potential to produce multiple products.

"In a way it's an ideal IPO company because they have a biotech platform and they've developed their own products on that platform," said Hans Kuepper, a partner at Global Life Science Ventures. "It's not like a lot of other companies that haven't proven their platform and have in-licensed late stage products."

COLY reported in May that a 112-patient Phase II trial of its lead product, ProMune CpG-containing oligonucleotide, roughly doubled tumor response rates in non-small cell lung cancer (NSCLC) when combined with chemotherapy compared to chemotherapy alone (p=0.048)(see BioCentury, May 9).

The technology is in the hot toll-like receptor space, which in March enabled COLY to land a deal around ProMune with Pfizer (PFE), which potentially is worth more than $500 million (see Cover Story).

All told, the story enabled COLY to raise $96 million through the seven times oversubscribed IPO, selling 6 million shares at the top of the $14-$16 range. The price gave the company a post-money valuation of $396.8 million. Partner PFE put in an additional $10 million through a private placement of 625,000 shares at $16.

COLY jumped $2.88 (18%) to $18.88 in its first day of trading and closed the week up $2.45 (15%) at $18.45 on 6.6 million shares traded in the first three days, of which 5.7 million shares traded on the day of the IPO.

The other driver was the interest of generalist investors. "Honestly, I don't think this IPO would have been possible with only

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