In Wall Street parlance, Anthera Pharmaceuticals took a haircut on Feb. 23, delaying its planned initial public offering in order to reduce its proposed share price and increase the amount of stock it hopes to sell.

The Hayward, Calif., biotech had filed an S-1A with the Securities and Exchange Commission on Feb. 3, stating it would try to sell 4.6 million shares of common stock for between $13 and $15 per share ([See Deal]).

However, Anthera filed new paperwork on Feb. 23, the planned date for the offering, saying it now would attempt to sell 6 million shares in the $8 to $9 range. The initial goal was to raise about $64 million; the revised offering, if successful, would top out at roughly $54 million. (Editor's note: Anthera filed an amended S-1 on Feb. 26, pricing its shares at $7 apiece and seeking to raise about $42 million.)

Anthera declined to comment for this story, citing a 30-day quiet period while its offer is pending. A spokesperson, however, indicated that the offering remains open and could be completed soon.

Citing the example of Ironwood Pharmaceuticals, which went public earlier this month, but only after reducing its sought-after share price, Simos Simeonidis, senior biotechnology analyst at Rodman & Renshaw, said he was not surprised by Anthera's delay or reworked IPO (Also see "Ironwood IPO Raises Plenty Of Cash And Plenty Of Questions For Biotech Investors" - Pink Sheet, 3 February, 2010.).

The Ironwood IPO ended up being priced appropriately, he asserted, -it sought to sell at $14 to $16 a share, but ended up getting $11.25 per share for 16.7 million shares. Ironwood's stock price has risen since the firm went public, unlike Omeros, which went public late last year and has seen its share price decline. The stock closed trading Feb. 24 at $5.59 per share, down from its $9.49 IPO pricing.

Only a very selective window for biotech IPOs

"I think there is a window for biotech IPOs, but it's going to be a very selective window," Simeonidis said in an interview. "Investors have a lot of pricing power...they're going to exercise a lot of pricing control on what they're going to pay. You saw Ironwood slash its price and then [Anthera] slash its price."

"That's how things are going to go unless the market [improves significantly]," he continued. "There is money to put into the sector for companies that are considered more de-risked."

De-risked is not how Simeonidis would currently describe Anthera, however. Its lead programs are a pair of phospholipase A2 inhibitors in-licensed from Eli Lilly and Shionogi in 2006 ([See Deal]). Topping its pipeline is A-002 (varespladib methyl), a daily oral therapy for short-term treatment of acute coronary syndrome. That program is ready for Phase III. The other lead candidate - A-001 for acute chest syndrome in patients with sickle cell disease - currently is in Phase II.

Neither program is partnered, Simeonidis pointed out, and both will require a significant amount of clinical development funding to reach market. To be sufficiently de-risked in the eyes of investors, a biotech probably needs to have a Phase III program, a strong partnership and be pursuing an indication in a large therapeutic area, he asserted.

"It's not the days when any Phase II [company] would go public; that doesn't happen anymore," Simeonidis said.

IPOs will continue in the current environment, he added, but most will have their pricing adjusted downward first. The market has told Anthera that its initial pricing was overly optimistic, Simeonidis said, and the company has the option of taking what it can get now or maybe waiting for a friendlier market.

"CEOs, in most cases, have an inflated view, a very optimistic view, of what their company is worth and that's probably a good thing because you want people who believe in what they're doing," he explained. "But sometimes there's a disconnect between what the CEOs want, what the VCs want and what the current market, the public investors, are willing to pay."

Public investors are still nursing their wounds from recent biotech losses and are more intent on making safe, wise investments than on catching the next wave, he added.

-Joseph Haas (j.haas@elsevier.com)

Anthera Takes A "Haircut" And Delays Its Planned Initial Stock Offering

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