By Michael Fitzhugh
Investor enthusiasm for the oversubscribed $20 billion General Motors (GM) initial public offering failed to carry over to the biotech sector where a flurry of issues raced to capture some of the excitement sparked by the carmaker’s record offering before the holiday lull. IPOs by Zogenix (ZGNX) and Anacor Pharmaceuticals (ANAC) here, as well as Zealand Pharma in Europe, all debuted to tepid market interest, each pricing well below what company managers hoped to fetch.
In a year where 21 new biotech and pharmaceutical issues have debuted on the U.S. market, most of them have been plagued by lackluster receptions. Nonetheless, the pull of liquidity, potential follow-on financings and the low odds of being acquired continued to lure small companies to market.
Zogenix sold 14 million shares at $4 each on Nov. 23 in an offering the company had postponed since August 2008. Its first commercial product, Sumavel DosePro, is a needle-free drug delivery system launched in January 2010 for the acute treatment of migraine and cluster headaches. The company plans to use the net proceeds from the offering to fund late-stage clinical trials and development for ZX002, its controlled-release formulation of the opioid hydrocodone and to fund the ongoing commercialization of its DosePro device.
Zealand Pharma, a Danish bio-pharmaceutical company developing peptide-based drugs for the treatment of metabolic diseases such as diabetes and obesity, raised $58 million (321 million kroner) in its initial offering, a third of what it had hoped to raise. The company trimmed the number of shares it offered and the price at which it would offer them after institutional investors expressed disinterest in its experimental heart disease drug, according to Bloomberg. Zealand shares, which are listed on the Nasdaq OMX market, priced at $15.37 (86 kroner) each. Zealand’s share price fell during initial trading, hitting $13.76 (77 kroner) during trading on Nov. 24.
Slipping into the market just before most investors turned their attention to turkey dinners, California-based Anacor raised $60 million through the sale of 12 million shares at $5 per share, priced far short of the $16 to $18 range in which it had hoped to price. The company plans to use the funds to pay off debt and to fund late stage clinical trials of AN2690 for fungal nail infections and AN2728 for psoriasis.
Despite the discouraging environment, 26 companies remain on the runway, a long list most recently joined by Clarus Therapeutics, AcelRx Pharmaceuticals and Ambit Biosciences. Whether investors will be able see far enough past the sector's pools of red ink to summon interest in supporting new offerings remains to be seen.