With just over two months to go, 2006 is turning into a dreary year for
biotech IPOs. So far, 10 true biotechs have debuted. (Specialty pharmas and
device developers don't count.) Only four have made it out since April.
Biotech dealmakers have turned instead to M&A and licensing for lucrative
investor exits and cash infusions to keep expensive development on track.
That doesn't mean biotechs aren't trying to go public. Several are currently
on file, and this week's
$52 million debut from Trubion Pharmceuticals, Inc. of Seattle could be
a bellwether for the rest of the year.
Trubion first registered for an $86 million IPO in June, a figure that in
better days such as the window of 2004 would have been a worthy goal. But
the developer of drugs for auto-immune disease and cancer ended up selling
only 4 million shares at $13 per share, the low end of its stated range.
Fifty-million isn't so bad, you might think, but consider Trubion has much
of what investors like to see in a biotech: such as lead drugs that address
wide areas of unmet need, not just niches; at least one program that has
made clinical headway; and a large corporate partner helping bankroll
development. Trubion in January signed a lucrative partnership with Wyeth,
which for $40 million upfront gained certain rights to Trubion's lead
compound that aims at rheumatoid arthritis. Trubion could also earn hundreds
of millions more in milestones in the future from the deal.
More relevant, though, was a side agreement for Wyeth to buy 800,000 shares
of Trubion in a private placement if it went public. With that, tack $10
million onto the $52 million from the IPO. And as the Deal's
George White reported yesterday, Trubion's VCs will make a tidy profit
of about 3 times on their investment, as Series A shares were sold at $4.08
each, and Series B shares went for $4.39 each.
Other biotechs on file include Rosetta Genomics Ltd. of Israel, Acologix,
Inc. of Hayward, Calif. (which has filed to debut in Japan), Emergent
Biosolutions, Inc. of Gaithersburg, Md., ActivBiotics, Inc. of Lexington,
Mass., and perhaps the most ambitious on tap, Affymax Inc. of Palo Alto,
Calif., which in July set its IPO ceiling at $115 million.
There hasn't been a $100 million biotech IPO in two years, and unless the
market makes a dramatic turnaround, there won't be one for some time. — Alex Lash
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