Ebb & Flow

After three weeks of downtime on the IPO front, two U.S. biotechs got out last week. It seems that investors were using the break to sharpen their shears. The good news is that Novacea (NOVC) and BioMimetic (BMTI) both posted modest gains on a week when the entire stock market was off. The BioCentury 100 Index ended the week down 4%, and NASDAQ and Dow Jones were down 4% and 2%, respectively.

"I think we're seeing the continued playing out of a market where there's a consistent group of core investors that price and buy deals," said Pacific Growth banker George Milstein. "The valuations may not be what companies hope for, but at least deals are getting done."

Milstein thinks investors are still willing to look at IPOs because "there have been occasional breakouts. You can make money if you're a good stock picker."

On average, the basket of 2006 U.S. biotech IPOs is up 7%, with eight deals above water and three below. "Most of the deals have worked out OK," said JMP banker Bob Carey. "The bad news is that it's really hard to get a deal done at the price you want."

Indeed, both IPOs went out below their proposed ranges. NOVC took the larger chop, raising $40.6 million through the sale of 6.3 million shares at $6.50 for a post-money valuation of $145 million. The Phase III cancer company was hoping to sell the shares at $11-$13. At $12, it would have raised $75.6 million and been valued at $267.8 million.

NOVC's DN-101 oral calcitriol is in Phase III testing to treat androgen-independent prostate cancer (AIPC).

The stock closed Friday at $6.60, up $0.10 on

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