Investors greeted the Nasdaq debut of Ironwood Pharmaceuticals (IRWD) February 2 with warm but restrained interest, allowing the company to raise $188 million to push its drug development plans ahead. At $11.25 per share, the sale fell short of the company's targeted $14 to $16 range, leaving room for worry about how other life science IPOs will fare. Underwriter Morgan Stanley planned to buy about half its 16.7 million shares.
The Cambridge, Massachusetts-based developer of Linaclotide, a late-stage treatment for irritable bowel syndrome with constipation and chronic constipation, is at least in good company. Cellu Tissue Holdings (CLU) and IFM Investments (CTC) both priced below expectations in January. And few other IPOs during December achieved their targeted ranges.
Furthermore, because sentiment around an IPO tends to reveal itself over the few weeks following the offering, Ironwood's reception is still an unfolding story.
Shares of Ironwood, which is trading under the symbol "IRWD," closed slightly up on their first full day of trading, February 3, ending the day at $11.65.
Ironwood came to the market with most of the elements of a popular story: corporate maturity, a solid late-stage drug candidate and a couple of licensing agreements for Linaclotide in place. On the flip side, the company has no revenue yet and is entering the market when even the biggest pharmaceutical players are having a rough time.
Next in the IPO line is Anthera Pharmaceuticals (ANTH), which focuses on inflammation-related diseases. It plans to sell 4.6 million shares for $13 to $15 per share.