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Bad Haircuts: 2005's Biotech IPOs--Getting Out at Any Price?

 
• By Chris Morrison

The haircuts suffered by 2005's biotech IPOs are further proof that while the appetite for biotech offerings exists, public investors are demanding a better likelihood of post-market upside.

The reduced offering prices that have become commonplace so far this year are unlikely to be signs that the public financing window is closing. (See Exhibit 1.) Instead, the haircuts suffered nearly across the board—and both in Europe and the US—in 2005 are more likely further proof that, while the appetite for biotech offerings exists, public investors are demanding a better likelihood of post-market upside. Often they're getting it, but not always.

In the US, anyway, those firms with the biggest haircuts were still trading down in the aftermarket. Favrille Inc. ...

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