Friday, October 09, 2009

Omeros | Lackluster IPO Debut a Good Sign?


Omeros (NASDAQ: OMER) launched itself onto the Nasdaq global marketplace yesterday with its initial public offering of 6.82M shrs priced at $10 raising approximately $68M less underwriting expenses. Its foray however, was more dud then thud relative to its peers in the Biopharma IPO Class of 2009. For Omeros is the only clinical-stage, pre-commercial, pre-revenue entity to get out and it would appear that the market is not going to reward entities at this stage of development as demonstrated by an immediate sell-off of some nearly 20% before clawing back a bit on this first day of trading to close at $8.73 per share.

This debut provides a very interesting piece of data, though with an N=1 it is hardly statistically significant, nevertheless let’s try and make this “empirical” statement – Pick your analogy, the biopharma public markets are thawing, the biopharma public markets window is opening etc., what is now been demonstrated is that the IPO route for pre-clinical biopharma is less liquidity opportunity for early investors and more financing event to capitalize operations.

Therefore a takeaway here may be to expect big pharma M&A to remain hyper-active for the foreseeable future. Though such a collection of trends may not be ideal for life science entities as options and leverage arms may be limited it is however, a sign that as the public markets claw and scratch their way back that newly positively trading companies are theoretically higher quality going concerns that are being demanded by the street; a clear message that irrational exuberance is no longer accepted…at least in the life science healthcare sector.

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