Will Ironwood's $267M IPO gamble pay off?

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This is a big week for Peter Hecht, the CEO at Ironwood Pharmaceuticals. While most private biotech CEOs are careful to hedge their bets and try to make their company attractive for either an IPO or a takeover, Hecht has always stayed focus on making the transition into commercialization work that would allow the company to swell into a big, multibillion-dollar player. And now Ironwood is hoping to take an enormous step in that direction as it plans to sell 16.7 million Class A shares at $14 to $16 a share.

That's a pricey dream, as Bloomberg makes clear this morning. The company's shares hold a ‘fair value' of $12.18 a share, so investors are being asked to pay a premium of 15 percent to 31 percent. And they're being asked to put up as much as $267 million in total in what is the biggest drug-related IPO in 10 years.

"We want to build a standalone, great pharmaceutical company," the CEO told me last year. "The ambition isn't size, its quality and making drugs that really matter." Ironwood's chances of success will hinge on the perceived future value of the late-stage drug linaclotide.

"The drug is a winner," Linda Killian from Renaissance Capital tells Bloomberg. "The question is, how big is the market? $1.5 billion for a single-product company is big."

You can also bet that there are plenty of other biotech CEOs out there holding their breath over this IPO. The public markets have been largely barred until recently. A clear sign that investors are willing to gamble on the future of a late-stage product outfit could easily trigger an IPO rush.

- here's the article from Bloomberg

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Ironwood Pharmaceuticals CEO Peter M. Hecht, Ph.D.