OncoMed extends the biotech IPO winning streak with $82M haul

Last year the thought of filing an IPO at OncoMed Pharmaceuticals probably would have sparked a few chuckles in the investment community. After 8 years in business, the biotech had raised more than $300 million dollars in venture backing and collaboration cash, scoring a solid development deal with Bayer. But like most small drug developers it was knee-deep in red ink and a long way from any product revenue--the sort of profile that investors had shunned for years.

Yesterday, though, the company not only managed to make the IPO leap, it joined a select few that have priced their shares above the range, boosting their take and proving once again that the IPO door has swung wide open and the welcome mat is out--for now. The company sold 4.8 million shares at $17, above the $14 to $16 shares range laid out earlier. The offering raised $82 million. And the stock price soared this morning, adding to its initial market cap of $460 million.

Like other successful biotechs, OncoMed ($OMED) had the support of backers offering to come in to support the IPO. Backers like Nomura Phase4 Ventures and US Venture Partners had provided a $154 million second round in 2008. Its work on cancer stem cells puts it squarely in a hot field. And the biotech struck deals with GlaxoSmithKline ($GSK) and Bayer, which signed on to a pact worth up to $387 million.

Jefferies acted as lead left bookrunner to OncoMed Pharmaceuticals in its IPO, which was upsized from 4 million to 4.8 million shares.

The key to OncoMed's IPO success was timing. After being shut out of the IPO market for years, the sector has finally seen the market offer a welcoming embrace for companies like these. Twenty-three biotech companies have now raised about $1.5 billion so far this year, with most of that coming in the red-hot second quarter, the best three-month IPO romp in more than a decade. And there are 5 more IPOs coming up next week--Onconova ($60M, ONTX, 7/25), Conatus ($55M, CNAT, 7/25), Cellular Dynamics ($57M, ICEL, 7/25), Heat Biologics ($27M, HTBX, 7/24), and Agios ($75M, AGIO, 7/23)--that could add another $275 million to the tally.

With this kind of money on the table, you can also expect that other biotechs have been blowing the dust off of some old S-1 papers. The big question for analysts now is how long the biotech IPO boom will last and how many of these risky bets will pay off?

- here's an item from Renaissance Capital

Special Report: The biotech IPO scene turns red hot