The market for initial public offerings has begun to behave likea Thanksgiving dinner guest who's had seconds and is nowbeginning to consider more carefully what he should have forthirds.

Since the start of the year, 15 biotech companies havecompleted IPOs, raising $577 million. That's more than half ofthe $1.1 billion raised in all of 1991 by 37 new issues.

But while the spate of filings hasn't abated -- 11 companies arewaiting to complete offerings worth about $347 million -- themarket has clearly become more cautious this month.

All 11 companies that went public in January and February didso with an expanded number of shares, and seven of thosecompanies also increased their prices above the proposed priceranges.

The story has been different for the four IPOs so far thismonth. Only SciClone Pharmaceuticals Inc. (NASDAQ:SCLN) hasincreased the number of shares sold, and none of the IPOs havegone out at higher prices. Telios Pharmaceuticals Inc.(NASDAQ:TLIO), the latest entrant, reduced both the size andprice of its offering.

Telios would have been valued at $240 million if it had sold 3million shares at the top of its proposed $10-to-$12 pricerange. But the San Diego developer of wound healing productswon't look at interim clinical data on its lead product, Telio-Derm, until April at the earliest. Without that data in hand,buyers may have felt more comfortable with the $152 millionvaluation that resulted.

"Interim data was very much of an issue," said PrudentialBache analyst Joseph Edelman. "If you don't have data, it's hardto make decisions."

In addition, said Edelman, wound healing markets in generalcan get tough. "People are confused because there are a lot ofplayers."

But if Telios and its underwriters, Morgan Stanley andHambrecht & Quist, can be criticized for trying to price the dealtoo high, the same could be said of almost any other IPO donein the past 12 months, said Linda Miller of PaineWebber. "Somaybe the market cares about those things now, and maybethree to six months ago it wasn't bothered."

The market has a case of indigestion, said Sarah Gordon, ananalyst at Amerindo Investment Advisors Inc. The stocks ofmany companies that went public late last year and early thisyear are struggling, she said. "There have been too manyofferings. Now you have to look more closely at the time lineversus the valuation. And in general, the quality of deals islower at this point."

-- Karen Bernstein BioWorld Staff

(c) 1997 American Health Consultants. All rights reserved.