24 Oct Though Weakening, Biotech IPO Market Still Viable, Burril & Co. Says
CHICAGO – Anyone following this column over the last few years knows about my propensity for lists.
These lists allow me to arrange information into tidy boxes in some meaningful order for others (or at least to make better sense out of the information for myself). While my list propensity didn’t come from David Letterman, his show enlightened me about how lists could be used to create awareness and humor at the same time.
In one of my companies, I even adapted the Letterman approach to monthly employee meetings so I could highlight rumors circulating around the company. Employees were surprised and laughed at my awareness of what was kicking around the company by what was displayed in front of them in black and white. This would often open doors of communication for our monthly meetings.
I owe this training in part to one of my first mentors and bosses. This person is an incredibly bright and creative Brazilian mentor and boss who took me under his wing several times in my career throughout my 10 years at Pfizer as well as eight years at Searle and Monsanto. This marvelous individual helped me put order to things that were always nebulous to me.
Naturally, this column will contain two lists: a biotech one and a musical one. We will begin with the biotech list, which covers the 2005 IPO market. What has happened in the almost 10 months of 2005? Let’s start with some of the facts, which are courtesy of Burril & Co.:
• The biotech IPO market has been open (at times with the window wide open and just a smidgeon at other times) since the fourth quarter of 2003.
• There have been a total of 46 biotech IPOs since the fourth quarter of 2003 through August 2005.
The good news is that the IPO market continues to stay open (yes, there have been some additional IPOs since August 2005). The bad news is that the average IPO deal size has been dropping. In general, this result means the average price per share has also been dropping.
Though I don’t have a composite analysis of the return on investment for the above companies, my impression from scanning the results is that most of the IPOs have provided negative returns for the investors who have held on since day one. Only 21 out of the 46 are showing positive returns. Of the companies that have had an IPO during this time period:
• Only two have market caps of $1 billion or more
• Eight companies have market caps between $500 million and less than $1 billion
• 25 companies have market caps between $100 and less than $500 million
• 11 companies have market caps under $100 million (which does not augur well)
According to Burrill, there are another 15 companies with IPOs that have been filed but haven’t yet come out to the marketplace (11 of which were filed in 2005 with the rest having been filed in 2004). Likewise, there are another 12 IPO deals that have been pulled (two of which were filed in 2005 and the rest in prior years).
Back in early 2004, Steve Burrill was confident that we would hit at least 50 IPOs in this IPO window. Though Burrill isn’t yet wrong (the IPO window has stayed open), we still haven’t hit that elusive number of 50.
The importance of the window staying open can’t be underscored as many VC funds need to reload. They can’t reload unless there’s an IPO. Even with an IPO, many VC funds have to hold their investment powder for a while as there’s usually a lockup for a period of time. Most IPO stock prices wander up and down in the first six to nine months after an IPO or experience a buyout by a larger company.
The Next-Best Rock Guitarists of All Time
A few weeks ago, I provided you with a list of the top 50 rock guitarists (courtesy of a Rolling Stone poll on Aug. 27, 2003). I promised to provide the second half of the poll, which lists the next 50 guitarists. Here we go:
It’s rather disappointing to see so few female artists listed. There’s no Bonnie Raitt, Susan Tedeschi, etc. I also have to say that I’m going to have to sit down for a session with my son as I don’t know a lot of these musicians.
While I’ve already given you my reaction to prior lists, what happened to such guitar greats as Leslie West and Joe Satriani? By the way, a new group called G3 (which has a new CD out) has emerged that features three guitar greats: John Petrucci (formerly with Liquid Tension Experiment and Dream Theater), Steve Vai (who played with Frank Zappa and Van Halen) and Joe Satriani. These musicians aren’t mentioned on the list.
In another recent column, I also mentioned the October birthday of John Lennon (who would have been 65). Coincidentally, another article in the Chicago Tribune listed the top 10 magazine covers of most impact in the U.S. (one of which featured a naked John Lennon with a fully clothed Yoko Ono on the cover of Rolling Stone from Jan. 22, 1981).
Well, I figured, let’s see if I can get my hands on this piece of rock memorabilia.
I knew right where to go. I called up friend Bob Katzman at his museum of print in Morton Grove, Ill. It’s called Magazine Memories. In addition to owning this store, he’s also a writer. He has put out two books in the last year and has more than 100,000 magazines dating back to 1840. That doesn’t even include his newspaper collection and posters.
I recently picked up from him some vintage Hendrix posters for my son, Beatles posters for a friend, a “Help” movie poster from the Beatles movie for myself and Beatles “popups” (cutouts of the Beatles that stand up by themselves). Sure enough, when I contacted Katzman, he had the John Lennon and Yoko Ono Rolling Stone cover and he held it for me.
He has since sold out of the four copies he had. This makes me wonder about the other rock treasure lode he surely has, which is to be explored. See you next week!
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