Biotechs braving stormy IPO waters to raise cash

A pair of life sciences companies which went public on Friday morning saw their shares surge upward in the afternoon. But the gains came only after each had chopped a huge chunk off their projected price ranges. And despite the fresh evidence of investors' chilly attitudes about high-risk biotech offerings, the string of life science IPOs is slated to continue this week with three more offerings.

Endocyte ($ECYT) had to cut its IPO price from $13 to $15 a share to a mere $6 to get its IPO out in front of investors. By the end of the day the share price had hit $7.73 on 12.5 million shares. If underwriters pick up their options the biotech could raise $86.3 million. The cancer and inflammatory drug developer has a lead prospect sitting on the threshold of a Phase III study.

Waltham, MA-based BG Medicine, a diagnostics company, saw its shares pop 10 percent on Friday. BG lopped off half its projected share price to go public at $7 a share, finally making good on a string of failed attempts to raise money on the public market.

None of that price cutting, however, appears to be scaring off biotechs as they line up to go public. This week Clarus Therapeutics, AcelRx and IASO Pharma are all in the queue. It may not be pretty, but these IPOs are raising tens of millions of dollars for drug developers.

"The environment right now is showing that people are very comfortable (with these companies) even though there is a lot of volatility," Apex Capital's Robert Francello told Reuters. "They don't need that much capital...the bigger the risk, the smaller the investment."

- read the story from the Indianapolis Business Journal on Endocyte
- see the MassDevice report on BG
- and here's the Reuters story on the string of IPOs this week

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