Pacira slashes IPO price while AcelRx braves a chilly market

Looking to raise cash to bankroll the expected release of a late-stage drug designed to treat post-surgery pain, Pacira Pharmaceuticals is closing in on an IPO this week. But in a fresh sign of just how ugly the IPO market can be for biotechs, the developer slashed its share price to $7, far below the $14 to $16 range that it had hoped for. If Pacira can pull off the offering at the lower price it will raise around $37 million to $42 million, most of which is earmarked for marketing expenses to cover the rollout of the pain therapy.

Undaunted by the poor prospects faced by any drug developer looking to go public right now, AcelRx, meanwhile, is pushing its own plans. The pain drug developer, which has no revenue, is hoping that investors will pay $12 to $14 a share to give it about $68 million for its own post-operative pain reliever--ARX-01. That drug is slated to begin Phase III, which is not an inflection point known to gin much enthusiasm on Wall Street.

Pacira relies on its DepoFoam technology to provide the timed release of drugs for up to 30 days. And by this summer it expects the FDA to rule on Exparel, a non-opioid that relieves pain after surgery for three days. The biotech has two products on the market. But none of that profile has managed to excite investors, who have been turning a cold should to biotech IPOs.

"People don't want to tie up their money in biotech companies for sometimes several years" during the development and regulatory processes, senior managing partner Scott Sweet tells Bloomberg. That's particularly true now that the FDA has been raising the bar on developers, making it even more difficult to gain approvals. And the trends have conspired to make biotech the worst performing sector in 2010. And Sweet was bearish on AcelRx's chances as well.

"These biotechs who have no revenues have no choice--because their cash burn rate is so high and they need the money so badly--they have to do a fire sale," he told the AP.

- read the report from Bloomberg on Pacira
- and here's the AP report on AcelRx

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