Biotechnology for IPO: results of last year and forecast for 2011
Top 10 IPOs of biotech companies in 2010Anna Shibaeva, "Weekly Pharmacy" www.apteka.ua
IPO (Initial Public Offering) – the initial public offering of a company's shares for sale on the stock market is one of the most effective ways to attract foreign investment. The purpose of the IPO is to attract capital for development, often the funds are intended for specific projects. In addition, the IPO allows you to achieve a new level of transparency and publicity, which is very positively reflected in the image of the company.
Despite the declared high prospects of biotech companies, one should not forget about investment risks at the early stages of R&D. This means that it is impractical to rely on the current financial indicators of its development when assessing the investment attractiveness of a company. In this case, it is important to take into account the probability of success of a particular project, which at the stage of commercialization can provide remarkable returns to its investors. At the same time, success is not guaranteed for innovative projects.
We present to our readers the rating of American biotech companies specializing in the development of medical products and technologies by the volume of IPOs in 2010, published on the FierceBiotech website (The 10 Biotech IPOs of 2010. The focus is on American companies, since the USA is a world leader in the field of biotechnology.
«PACIFIC BIOSCIENCES»
IPO amount: US$ 200 million
Date: October 27, 2010
Price range: $15-17.
Real price: $16
Pacific Biosciences (Menlo Park, California) occupies the 1st place in terms of the volume of initial public offerings in 2010 among global biotech companies. So, in 2010, the company raised $200 million through an initial public offering to finance the launch of the innovative high-speed DNA sequencing technology SMRT. The amount of venture capital of Pacific Biosciences before the IPO was $ 370 million. The company's shares were sold at a price of $16 each. Pacific Biosciences shares are listed on the NASDAQ Stock Exchange under the ticker PACB.
SMRT technology is a real–time single-molecular synthesis system. The developers of this technology, as the main advantages over other sequencing systems, highlight the long reading length, high speed of results generation and accessibility in use.
«IRONWOOD PHARMACEUTICALS»
IPO amount: $187.5 million.
Date: February 3, 2010
Price range: $14-16.
Real price: $11.25
The volume of the initial public offering of shares of the American pharmaceutical company Ironwood Pharmaceuticals in 2010 amounted to $ 187.5 million. It is noteworthy that the placement was held at a price of $ 11.25 per share, although the preliminary price range was set in the range of $ 15-17 per share. The company's shares are listed on the stock exchange under the ticker IRWD.
Currently, the linaclotide drug of Ironwood Pharmaceuticals, which is a candidate for the treatment of irritable bowel syndrome, is in phase III clinical trials. In the third quarter of 2011, Ironwood Pharmaceuticals and Forest Laboratories, which cooperate in the development of this drug, plan to apply for its approval in case of successful completion of the second phase of Phase III studies.
«AVEO PHARMACEUTICALS»
IPO amount: $81 million
Date: March 12, 2010
Price range: $13-15.
Real price: $9
AVEO Pharmaceuticals was conducting the final stage of clinical trials of the drug tivozanib, intended for the treatment of renal cell carcinoma, when an IPO worth $81 million was carried out in March. Despite the rather successful development of events in relation to tivozanib, as well as a number of other projects (the company also has drugs in phases I and II of clinical trials on its account), the shares were placed at a price of $9 per share, which is significantly lower than the previously assumed price range of $ 13-15. On the stock exchange, the company's shares are listed under the ticker AVEO.
«CODEXIS»
IPO amount: $78 million
Date: April 22, 2010
Price range: $13-15.
Real price: $13
Codexis develops enzymes that are used in pharmaceutical production, in particular, by Bristol-Myers Squibb Co., Merck&Co., Inc. and Pfizer Inc. In April 2010, the company carried out an IPO in the amount of $78 million to finance the acquisition of new technology and expansion of production facilities. The company's shares were placed in the lower area of the previously estimated price range – at $ 13 per share.
«COMPLETE GENOMICS»
IPO amount: $54 million
Date: November 11, 2010
Price range: $12-14.
Real price: $9
The company "Complete Genomics" had high hopes for 2010, the company planned an initial public offering of 6 million shares at a price of $ 12-14 per share for a total amount of about $ 84 million. However, expectations were not destined to be fulfilled. In November 2010, the company's shares were placed at $9 per share for a total amount of $54 million. On the NASDAQ stock exchange, the company's shares have the ticker GNOM.
According to the results of the third quarter of 2010, Complete Genomics sequenced the genomes of more than 300 people, approximately the same amount of work, according to preliminary estimates, was provided to the company in the fourth quarter. In 2011, it is planned to increase this indicator. Among the company's key goals in the process of developing genome sequencing technology are high data processing speed and low cost of the process. The target cost of sequencing a single genome is no more than $1,000.
«NUPATHE»
IPO amount: $50 million.
Date: August 5, 2010
Price range: $14-16.
Real price: $10
NuPathe planned to place 5 million shares at a price of $ 14-16 for each, but their real price was $10 per share for a total of $ 5 million. On the stock exchange, the company's shares are listed under the ticker PATH.
NuPathe Inc., a company engaged in innovative developments for the treatment of neurological and mental diseases, after receiving positive results of phase III clinical trials of Zelrix™, a transdermal system for the treatment of acute migraine, submitted a marketing application for its approval in October 2010.
«TRIUS THERAPEUTICS»
IPO amount: $50 million.
Date: August 2, 2010
Price range: $12-14.
Real price: $5
The hopes of the company "Trius Therapeutics" for an IPO last year failed. The company managed to place its shares at a price of $ 5 per share, which is significantly lower than the planned price range of $ 12-14 per share. On the NASDAQ stock exchange, the company's shares are listed under the ticker TSRX.
The attraction of additional funding was due to the company's concerns about the lack of funds for the development, clinical research and commercialization of the drug torezolid (prodrug TR-701), intended for the treatment of gram-positive infections.
«AEGERION PHARMACEUTICALS»
IPO amount: $47 million
Date: October 22, 2010
Price range: $14-16.
Real price: $9.5
In October 2010, Aegerion Pharmaceuticals entered the IPO with 5 million shares at a price of $9.5 per share, although the projected price range was $14-16. The company's shares are listed on the NASDAQ stock exchange under the ticker AEGR. The most potential product of the company is lomitopid, a microsomal protein that transfers triglycerides, intended for oral administration once a day in patients with severe lipid metabolism disorders. In the USA, the Food and Drug Administration has assigned lomitopid the status of an orphan drug for the treatment of homozygous familial hypercholesterolemia, and the European Medicines Agency for the treatment of hypertriglyceridemia.
«ANTHERA PHARMACEUTICALS»
IPO amount: $42 million
Date: March 1, 2010
Price range: $13-15.
Real price: $7
Anthera Pharmaceuticals planned to raise $69 million through an IPO, but the placement of 6 million shares of the company was held at a price of $ 7 per share for a total of $ 42 million. On the Nasdaq stock exchange, the company's shares are listed under the ticker ANTH. Anthera Pharmaceuticals is a biopharmaceutical company specializing in the development and commercialization of products for the treatment of cardiovascular and autoimmune diseases.
«TENGION»
IPO amount: $30 million
Date: April 9, 2010
Price range: 8-10 USD.
Real price: $5
In April 2010, Tengion placed 6 million shares at a price of $ 5 per share for a total amount of $30 million, which is below the projected price range of $8-10. The company's shares are listed under the ticker TNGN. "Tengion" specializes in the development and commercialization of growing new organs and tissues.
The near future
According to the forecasts of biotechnology industry expert G. Steven Burrill, President of Burrill & Company, the coming year promises good prospects for the development of biotechnology, and the financial environment is also expected to improve (Biotech Guru G. Steven Burrill Offers his Predictions on What Lies Ahead for the Biotech Industry in 2011). After the crisis hit, investors' confidence in the dynamically developing industry is beginning to recover.
In 2011, the appetite of Big Pharma for biotechnology is expected to grow further. Moreover, there will be a restructuring of cooperation models in the field of innovative projects. The days when biotech companies collaborated with pharmaceutical companies under a prepayment scheme in exchange for access to their technologies are numbered. Future agreements will be based on risk sharing by minimizing initial transaction payments, and the main calculations will be carried out when certain stages of product development and commercialization are reached.
Regulatory initiatives will also contribute to changing the situation in the field of biotechnology and the pharmaceutical industry, and the reform of healthcare systems will continue. It is expected to increase the emphasis on the pharmacoeconomical aspects of evaluating the effectiveness of insurance medicine. Along with the rapid development of the generic segment of the global pharmaceutical market, as patent protection for many drugs expires, progress is expected in the segment of biosimilar drugs, provided that a favorable legislative framework is created.
Attention is being paid to measures to prevent diseases and maintain health. Significant progress is expected in the field of genomics and molecular diagnostics. The problems of regenerative medicine are relevant. A great future is predicted for personalized medicine.
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02.02.2011