Just when "IPO" had begun to sound like a code acronym or something from a foreign language, biotechnology's long drought with regard to initial public offerings seems to have ended with an August downpour.

Apparently not fearing the risk aversion that ruled the industry in 2001, last year and during much of 2003, a veritable parade of firms has filed to go public. Is a window about to open? Stuart Collinson, partner with Forward Ventures, thinks so.

"Some time has passed now, and we usually see a window open every three or four our five years," he said. "We've seen a number of financings being done that are not IPOs - [private investment/public equity deals], convertibles, follow-ons. These are usually a precursor."

Investors are still "feeling a little raw after the bubble in 2000," he allowed, a year that saw IPOs by some companies that "shouldn't have gone public then, or now, or any time for that matter."

Collinson is the former president, chairman, and CEO of Aurora Biosciences Corp., where he completed the merger with Vertex Pharmaceuticals Inc. that valued Aurora at $600 million.

"I've seen both sides of the story," he said. "Running a public company is a very challenging place to be," and it's not for everybody, even if the opportunity seems right.

Which it does, Collinson said, but "seems" may be the operative word. Factors outside biotechnology can have a powerful effect on whether IPOs work out.

"There's some question as to whether we are steaming up a recovery curve" in the overall economy, he said. Employment numbers, political instability and the situation in Iraq have effects on the market's openness to new public companies.

But candidates are lining up for a try. The whopper in the bunch was CancerVax Corp., which didn't specify the number of shares or their price but is aiming to raise $115 million so it can forge ahead with Phase III trials testing Canvaxin, an immunotherapy product for skin cancer. Two trials are under way: one in Stage III melanoma expected to enroll 1,120 patients and another in Stage IV melanoma with 660 patients.

Nitromed Inc. said it expects to garner $100 million, to be used for commercialization of its lead product, BiDil, and other purposes. BiDil is a combination of isosorbide dinitrate and hydralazine hydrochloride designed to improve survival in African-Americans with heart failure. A pivotal confirmatory trial is under way in 600 men and women, and results are expected early next year.

All Eyes On IPOs' After-Market Performance

Tied for next in line according to their expectations are Advancis Pharmaceutical Corp. and Pharmion Corp., which filed to raise $86.25 million and $86.3 million, respectively. Advancis didn't specify a share price or number of shares, but said in its prospectus that the company intends to use the proceeds for its developing antibiotic pipeline and other purposes. Pharmion wasn't specific, either, about shares or price. The company has bought rights to several products, including thalidomide for relapsed and refractory multiple myeloma from Celgene Corp. and Penn T Ltd., a branch of Penn Pharmaceutical Services Ltd., for all countries outside of North America and certain Asian markets.

Shooting for $75 million in its IPO is TolerRx Inc., focused on immune system diseases. Its most advanced candidate, TRX4, is the subject of an investigator-sponsored Phase II trial of 80 patients in Europe with new-onset Type I diabetes.

Aderis Pharmaceuticals Inc. also hopes to raise $75 million. The company, which failed to get an IPO done in 2002, has four products in development for five indications. In Phase III trials in the U.S. and Europe is Rotigotine-CDS, a dopamine D2 receptor agonist, a transdermal patch for first-line treatment of early stage and combination therapy for late-stage Parkinson's disease. The drug is partnered with Schwarz Pharma AG, and also has been formulated as a reduced-dose patch for the treatment of restless legs syndrome.

The estimated cash sought by Myogen Inc. is $70 million, having filed for its IPO right after raising $40 million through a private placement of additional shares of its Series D preferred stock to a group of current institutional investors. Myogen markets one product in Europe - Perfan IV (enoximone) for acute decompensated heart failure - and is developing three more for cardiovascular indications.

Genitope Corp. said it aims to raise $68.8 million for, among other things, work on its lead product candidate, MyVax personalized immunotherapy. A Phase III trial is ongoing with Genitope's patient-specific approach, basing the drug on the unique genetic makeup of a patient's tumor.

Taking another shot at its IPO is Acusphere Inc., which first filed about two years ago but withdrew in December 2001 because of tight market conditions. The company now expects to raise between $48.8 million and $56.3 million, selling 3.75 million shares at between $13 and $15.

Acusphere develops drugs and new formulations using its porous microparticle technology. The lead candidate, AI-700, is in clinical development as an intravenous ultrasound contrast agent for screening patients with suspected coronary artery disease.

The Montreal-based firm Neurochem Inc. filed for its IPO in the U.S. and said it will offer a new issue of shares in Canada, where it's already trading publicly. Neurochem intends to offer 4.2 million shares that, based on the company's then-most recent (Aug. 18) closing price of C$14.48, or US$10.41, would raise about US$43.7 million.

Neurochem's drug development hopes lie in small molecules designed to bind to amyloid proteins. The lead product is Fibrillex, in a Phase II/III trial for amyloid A amyloidosis, a systemic disorder. Second in the pipeline is Alzhemed for Alzheimer's disease, for which Phase III trial design is in progress.

CancerVax's IPO move may have been the most interesting of the crop for reasons beyond its size. The bid to go public came the day after CancerVax raised $41.4 million through a Series C round of financing from a group of undisclosed new and existing investors, selling 20.5 million shares at $2.01 each, with those shares to be converted into common stock and become part of the IPO.

The company's ride has not been smooth. In the spring of 2002, the FDA stopped the now-restarted Canvaxin trials, pointing to concerns over production. But CancerVax noted that patients who'd been getting the drug never discontinued treatment, and the clinical hold did not stem from any clinical practice or safety concerns by regulators. Trials resumed about a year later.

Recent IPO filings may not signal a feast of going public, said Safi Bahcall, CEO of Synta Pharmaceuticals Inc., which made headlines in March with $73.5 million in funding. Synta has full rights to 10 small-molecule programs, with clinical advancement plans for three this year. The lead compound is STA-4783 in Phase I, which enhances taxanes, and has been shown to eradicate tumors in a variety of preclinical models.

"We have been approached by a number of investment banks and have talked to quite a few of them, as well as a number of investors from the buy side," Bahcall told BioWorld Financial Watch early last week. "My sense is that investors are looking for strong companies and waiting for companies that are quite a bit stronger than the last set that went out in the last window."

Investors, he said, "are going to be cautious and wait to see how the first few offerings do in the after-market. To date, the IPO after-market has performed very well and that's easing some risk in the minds of some investors, but there's a lot of caution left. They know who the strong companies are that are out there, and we haven't seen those filing yet."

Living Dead' Casualties of Poorly Timed IPOs

Such firms, Bahcall said, "don't have an immediate or desperate need for capital," and thus have been in no hurry to go public. Privately held Synta seems to be doing well for itself. Investments since 1997 (prior to the latest round) totaled more than $50 million. Bahcall said the latest infusion of funding will last two to three years.

Another company feeling no IPO urgency is Idenix Pharmaceuticals Inc., which in March entered a deal with Novartis Pharma AG that could be worth up to at least $862 million. Idenix has three later-stage hepatitis drugs of interest to Novartis. "We're one of the few companies that have the luxury to wait," acknowledged Idenix CEO Jean-Pierre Sommadossi.

"There may be several IPOs, but it's going to be a difference between successful or so-so IPOs," he added. "The bottom line is, when you have sufficient data to convince public shareholders that the risk is gone and they can base their projections on revenues that will happen in 12 to 18 months," then the time is right for an IPO try. And not before.

"Our major goal is to deliver milestones," Sommadossi told BioWorld Financial Watch, noting that Idenix will be disclosing positive data in the fall and expects to file a new drug application in late 2005 - both of which will help put the company in position for "an extremely successful IPO within the next 12 months, I will say."

The Idenix portfolio includes telbivudine (LdT), which entered Phase III trials in January; NM283, which began Phase Ib/IIa trials the same month; and valtorcitabine (val-LdC), also in Phase Ib/IIa trials.

Sommadossi said the company will be "very opportunistic. You only do the IPO once. You want to make sure the value is going to go up and not, within six or nine months, have the value shaved by 50 percent."

Idenix has "created a major return to our private shareholders, and that's the way to maximize the upside for our future public shareholders," he said. "We don't want to be guinea pigs. We have too much to lose. We can't afford to lose."

Hardly anyone can, Collinson said.

"If you push a company out and the stock trades very badly, then it's not going to be successful," he said. "It's a kind of living dead; there's no liquidity, no volume. You'd be better off being private."

But "people are being fairly sensible" in the latest wave of IPO filings, Collinson added.

"To say that only weak companies will get out is wrong, because it's very difficult to time an IPO window," he told BioWorld Financial Watch. "If a company is being groomed to do an IPO, in most cases the bankers, the management, investors are making sure the company has the strength."

Forward Ventures is working with three companies that have IPO designs.

One, an oncology firm, "is preparing very strongly right now and has all the characteristics," Collinson said. "It's got a product very close to approval, a management team that is seasoned and the kind of corporate governance you would expect to see in a public company."

The strong survive, and more in the sector are gaining strength. Even with economic conditions and others less than optimal, he said, "if you join the dots up, it's a reasonable assumption that a window could open. The time is increasingly right for biotechnology."