Hope Springs Eternal in Biopharma IPO Pricing but Bad Haircuts Continue

While public investors have proven relatively receptive to biopharma IPOs lately, the anticipation of those deals’ issuers remains a step ahead of the market: the final share price of deals closed so far this year averages 16% below the midpoint of the anticipated price range for those IPOs priced above $5 per share (excluding, that is, the deals of Canadian DiaMedica Inc. , London’s Neuropharm Group PLC , and Israeli BioLineRx Ltd. ) [See Deal][See Deal][See Deal] While START-UP first noted an industry-wide tendency to overestimate the prices IPO investors were willing to pay in early 2005, IPOs have regularly fallen short of the anticipated price ever since, with few exceptions. (See "Bad Haircuts: 2005's Biotech IPOs--Getting Out at Any Price?" START-UP, March 2005. Also see "Bad Haircuts: 2005's Biotech IPOs--Getting Out at Any Price?" - Scrip, 1 March, 2005.)

This year those exceptions were Chinese bioinjectables manufacturer 3SBio Inc., which netted $107 million in February [See Deal], and...