Capital Markets

The Cradle of the IPO

Public offerings are still flat, except in Greater Boston, which has spawned 14 so far this year, led by biotech.
Roy HarrisAugust 28, 2007

In an otherwise quiet year for initial public offerings, eastern Massachusetts is making some noise as the birthplace of publicly traded biotech firms.

The Boston Globe calculates that the latest announced IPO — by the five-year-old Waltham-based early-stage cancer drug developer Adnexus Therapeutics Inc. — would become Massachusetts’ fifteenth new public company this year, were it to be completed in 2007. The 14 IPOs already are the most in the state since the tech boom ended in 2000, according to data cited from Renaissance Capital’s division. Nine Massachusetts companies went public last year, according to the site, which says that the 219 IPOs overall in the U.S. through mid-August represents an 18-percent year-to-year rise.

Massachusetts owes its distinction largely to biotech. The five life sciences firms in the state to have gone public already are Molecular Insight Pharmaceuticals Inc., Sirtris Pharmaceuticals Inc., and Helicos BioSciences Corp. in Cambridge; Insulet Corp. in Bedford; and Synta Pharmaceuticals in Lexington. All those cities are in the Greater Boston area.

The Globe quoted experts as saying that the IPO pipeline has slowed in recent weeks, possibly awaiting a new cycle after Labor Day, and a period of less stock-market turmoil.

“Typically, we see the most biotechs when the market is doing the best, because a lot of biotech investments are risky,” according to Renaissance IPO analyst Phil Stiller, quoted in the paper. “If people have an appetite for risk, the biotech deals tend to get done.”

Adnexus has no assurance of winning federal approval to sell drugs, and thus generates little revenue, ran last year at a $14.3-million loss, and has accumulated $59.5 million of debt, according to the Globe. However, the company has signed a partnership with Bristol-Myers Squibb Co., which has paid it $20 million and agreed to fund further research over three years. Adnexus has raised $76 million in venture captial, including a $15.5-million round this month.