Ironwood Pharmaceuticals showed today that an IPO market does exist for a serious biotech company without a moneymaking product on the market, but that investors’ appetite for the speculative business of drug development is modest.
The Cambridge, MA-based biotech company set its initial public offering price at $11.25—a far cry from its forecasted price range of $14 to $16. By the end of today’s trading, the initial investors had made a little money, as the stock (NASDAQ: IRWD) opened trading at $12.40 and finished the day up 3.6 percent to close at $11.65, after about 2.7 million shares changed hands. This action came on a ho-hum overall trading day, in which both the Nasdaq Composite and Nasdaq Biotechnology Indexes were basically flat.
Importantly for Ironwood, the IPO raised $188 million in new cash for operations, turned the company’s stock into a liquid asset for its employees and venture investors, and established an initial market valuation of $1.1 billion.
The Ironwood deal marks only the third time in two years that a biotech company in the product-development phase has been able to complete an IPO. Sunrise, FL-based Bioheart did it in February 2008, and flamed out soon after, while Seattle-based Omeros (NASDAQ: OMER) has lost almost 40 percent of its value since it went public in October. As I noted on Monday, Ironwood is clearly in a different category than most biotech IPO candidates, since it has a drug for a big market that has already passed two pivotal clinical trials. Still, plenty of biotech investors were hoping Ironwood could crack open the IPO window, and re-ignite the interest of general public investors in other IPO aspirants.
I have a few calls out to ask for commentary about what ripple effect the Ironwood deal may have on the rest of the biotech sector, and I may update this space later if I hear anything noteworthy.
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