The Wall Street Journal offers its own bleak assessment of the biotech IPO market this morning, reviewing a string of disappointing offerings capped by Tranzyme's decision to cut its price from the $11 to $13 range to a mere $4 in order to complete the financing. In the process, its three biggest investors--HIG Ventures, Quaker BioVentures and Thomas McNerney & Partners--saw their stakes diluted from a hoped-for 14.1 percent to 9.2 percent.
The implications for the sector are huge, notes the WSJ's Scott Austin. With biotech IPOs in distinct disfavor, pharma companies have the edge at the bargaining table when it comes to collaborations and buyout talks. Investors aren't encouraged when they see a biotech like AcelRx go public at $5--it was shooting for $12 to $14--only to wind up at $3.17. And in fact all five of the biotech IPOs this year failed to deliver anything close to their projected price range.
In the meantime, other tech ventures have seen successful IPOs, raising the competition for VC bucks. It's no wonder then that venture investments in biopharmaceuticals fell to $3.4 billion last year, the third straight annual drop for a critical bellwether statistic.
- here's the analysis from the Wall Street Journal
Special Report: The 10 Biotech IPOs of 2010