From bioscope: sfgate.com
This is shaping up as the year of the business scandal. The accounting fiasco at Enron and the shady sales tactics used to push IPOs have painted U.S.
capital markets as a house of cards.
Now the biotech community, though not a prime suspect in the corporate crime drama, is facing several issues that warrant soul-searching.
These issues include the pathetic performance of recent biotech IPOs, the tactics used to sell these offerings, and the imbroglio swirling around the New York biotech firm ImClone.
Let's start with the IPOs.
Like high tech, biotech experienced an IPO boom during the recent financial bubble. Between November 1999 and December 2000, investors minted 51 new public biotech companies, according to the FactSet financial database.
As of Friday, only eight of these new biotech firms were trading above their opening IPO price, according to split-adjusted data from FactSet.
Three Bay Area firms were among the winners. Brisbane's InterMune is trading at a 57 percent premium over its IPO opening price. Santa Clara's Symyx Technologies closed 14 percent ahead of its IPO opening on Friday, while South San Francisco's Tularik is 12 percent above its debut.
One biotech firm was acquired and is no longer independently traded. The other 42 biotech newbies are trading well below their openings.
Among the Bay Area's losers, Exelixis closed 28 percent below its IPO opening on Friday. Durect, Genencor, Sangamo BioSciences and Rigel Pharmaceuticals were off between 35 and 45 percent. Kosan Biosciences, Deltagen and Cepheid are worth about half of what investors paid for them initially.
Shares in Maxygen and Virologic are roughly 60 percent below what they commanded at their IPO opening. Ciphergen Biosystems, Large Scale Biology and Aclara BioSciences are off more like 80 percent.
At the biotech financial conference in San Francisco earlier this month, the buzz was all about when Wall Street might regain its appetite for new biotech offerings.
I think new IPOs should wait until more of these companies break even. Either that, or until investors forget that losers outnumbered winners 6 to 1 the last time biotech IPOs were "hot."
SNIP |
