When Momenta Pharmaceuticals Inc. sought out the capital markets a year ago, the company priced its initial public offering significantly below the expected range.

Here was a company barely 3 years old in a "post-bubble" financing environment, which was "an interesting time to try to build a company," said its chairman and CEO, Alan Crane.

The Cambridge, Mass.-based firm, which has a lead generic version of the blockbuster blood-thinner Lovenox, sold 5.4 million shares at $6.50 apiece, raising $34.7 million in June 2004. The original price range was between $13 and $15 a share.

That IPO at a discounted price was not simply a scramble for some cash; it was a strategy to access the capital markets with a mid-to-long-term growth outlook. And it appears to have worked, considering Momenta's stock surged more than 62 percent in early June when a judge invalidated Paris-based Sanofi-Aventis Group's Lovenox patent.

Momenta's shares climbed to close at $16.50 that day. In a year's time, the company has more than doubled its value - a result that, at least in part, is due to going public at a lower pricing.

"We realized it would position us to create value that we wouldn't be able to create otherwise," Crane said this month at the Biotechnology Industry Organization's 2005 annual international convention in Philadelphia.

Momenta's IPO story is not much different from others that have priced well below their expected price ranges in the past two years. Some of those companies needed liquidity to satisfy venture capitalists, while others just wanted to get into the game and didn't want to wait. But most, if not all, had late-stage products at the front of their business portfolios, instead of broad platform technologies with no clear lead products.

In 1999, about half of the biotech firms going public were platform companies. About 24 percent of those that went public had products that were at the Phase III stage or later. By contrast, today's numbers show that only 3 percent of platform companies conduct IPOs, while 70 percent of those going public are at least in Phase III trials, said Jessica Chutter, a managing director at New York-based Morgan Stanley & Co. Inc.

Immunicon Corp. is another example of a company wanting more but getting less in its IPO: It raised $48 million in its April 2004 IPO, a little more than half of the $86.25 million it initially hoped to bring in. While Momenta's lead product, M-Enoxaparin (generic Lovenox), will be the subject of an abbreviated new drug application in the coming months, Huntingdon Valley, Pa.-based Immunicon already had a marketed product - CellSearch Epithelial Cell Kit, partnered with Johnson & Johnson's Veridex LLC, for the management of metastatic breast cancer. Veridex received 510(k) clearance for the diagnostic in January 2004, three months before Immunicon completed its IPO.

But that is where the similarity between Immunicon and Momenta ends. Unlike Momenta, Immunicon is trading below its IPO price of $8 a share - closing earlier this month at $5.84.

"An IPO is now the unpromised land, and we might as well recognize that," said Ed Erickson, Immunicon's chairman and CEO, who along with Crane spoke at a finance breakout session in the Pennsylvania Convention Center.

It is no longer the "VC heaven" it once was, and companies expecting to go public should consider that the time to VC exit will be longer and the post-IPO liquidity will be "lower and slower," Erickson said.

Private companies need to be thinking like a public company from the day they receive their Series B funding. They need to have their intellectual property and learn how to market to banks and analysts. And above all, they need to have good data.

"In terms of the data, we were pretty bulletproof," Erickson said, "but you can never have too much data."

Likewise, Momenta had strong data for its technology, which was based on a Massachusetts Institute of Technology process that enables the sequencing of complex sugars. The company raised almost $50 million privately before conducting its IPO.

But Crane said the company felt no pressure from venture capitalists to do an IPO. Although he knew going public would change the nature of his job - he would need to devote a large amount of time to disclosures and filings and other requirements - he was concerned about missed opportunities and the cost of not being able to access capital.

By going public, the reward was an eventual 62 percent stock increase due to the unexpected crushing of the Lovenox patent.

"The more unanticipated positive newsflow, the better for the sector," Chutter said.

Of the more than 40 biotech and specialty pharmaceutical companies that have gone public over the last few years, only about 15 are trading flat or above their IPO price, according to an analysis done by Momenta.

Chutter said that the share prices of biotech IPOs conducted in 2004 are, on average, down 25 percent. The fluctuating prices sometimes occur with no rhyme or reason, but other times a significant event like the market withdrawal of Tysabri, from Biogen Idec Inc. and Elan Corp. plc, has a huge impact.

"This was a product that had very significant expectations in the multiple sclerosis arena," Chutter said.

In one day, the biotech industry lost $21 billion in value.

On the other hand, Genentech Inc. had three major clinical events this year pertaining to the potential cancer blockbuster Avastin and its macular degeneration drug Lucentis. Those events resulted in an incremental market value climb of $27 billion.

"The market is awake and they're reacting to good news," Chutter said.

The volatility of the market might steer some biotech companies toward other options. Some might consider reverse mergers, but none of the panel members at the BIO session thought it was the best solution.

"I think bad companies do that," Erickson said.

"Whatever you merge into has scars and liabilities," said Steve Singer, a senior partner with Boston-based Wilmer Cutler Pickering Hale and Dorr LLP. "You really have to be careful."

They cited Endo Pharmaceuticals Holdings Inc.'s reverse merger into Algos Pharmaceutical Corp. as an example. The two companies merged in 1999 in a transaction that resulted in Endo becoming a public entity, but the panelists called Algos a "troubled" company, and said that Endo probably could have gone public on its own.

Companies that already are public also might look for ways to increase value for their shareholders, aside from depending on stock price. Vicuron Pharmaceuticals Inc. recently was bought out by Pfizer Inc. for $1.9 billion, a 74 percent premium to Vicuron's average closing stock price over 90 days.

While Vicuron conducted an auction to get that price - a rarity for the biotech industry - it provided the company "another avenue in terms of liquidity for [its] investors," Chutter said.

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