With the IPO market waters looking distinctly chilly these days, if not outright frigid, BioWorld says that a growing number of biotech companies are turning to the reverse merger ploy to take themselves public. Athersys and Nile Therapeutics took that route last year. And Philip Young, the CEO of Osteologix, touts the reverse merger as faster and less expensive than the IPO course. But there are rules, cautions Rodman and Renshaw's John Chambers. A successful reverse merger should come at a time of forward progress, when the company can boast about significant new clinical data or a pipeline advance. And there's no guarantee you'll be suddenly showered with new funds.
"Unlike an IPO, a reverse merger does not necessarily automatically provide operating funds to the company, so having a solid funding strategy either concurrent or following the merger is essential," says Raptor Pharma CFO Kim R. Tsuchimoto.
- read the article in BioWorld