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Stemline delays IPO to fund cancer drugs

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Stemline Therapeutics delayed its initial public offering this week, as another biotech faces a rocky road from private to public status. The oncology drug specialist planned to raise $42 million in an IPO this week at a price of $11 to $13 per share, the Nasdaq reported Tuesday, selling itself as a leader in the development of drugs that home in on cancer stem cells that are implicated in cancer recurrence.

The 9-year old biotech touts the fact that there are two compounds in its pipeline, SL-401 and SL-701, in clinical development for acute myeloid leukemia and brain cancer, respectively. The drugs are set to advance into Phase IIb trials, yet New York-based Stemline lacks a late-stage contender or a marketed product, meaning that the company could be several years away from making any money on drug sales--if it ever generates sales at all.

Risky biotech bets have been a difficult sell to public investors in recent years after many earlier pre-commercial drug developers disappointed. In May Rib-X Pharmaceuticals and Cancer Genetics both postponed their IPOs, and many biotech groups have been forced to settle for much lower prices for their shares than initially sought to finish the deals. This has been a bane for venture backers of biotech because IPOs were once a reliable exit option for them. Not anymore.

Verastem ($VSTM), another developer of drugs against cancer stem cells, proved earlier this year that a biotech without a clinical-stage asset could complete an IPO. In that case, CEO Christoph Westphal, who made a fortune for investors with Sirtris Pharmaceuticals, benefited from a syndicate of deep-pocketed backers to pull off Verastem's $55 million the deal.

- here's the Nasdaq report
- and the Wall Street Journal article (sub. req.)

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