Friday, June 01, 2007

Jazz IPO Fails to Generate Buzz

IN VIVO Blog prefers the strong stuff

Jazz Pharmaceuticals IPO price fell from an expected $24-26 to a hoped-for $20-21 to an actual $18 per share, raising only $108 million when it had banked on at least $150 million. This morning the stock traded down in its first session, losing about 5% as of noon ET.

We've addressed the vaguaries of IPO pricing in the past, here and, more recently and more optmistically, here. Jazz would have been one of our bets to succeed in the IPO market where others had failed, given its larger-than-average size and impressive pedigree.

But it wasn't all rosy. The NYT played up the risks associated with Jazz's Xyrem (a.k.a. GHB) in a piece the other day and noted the biotech was running out of dough. $108 million should give the company an extra year or so of cash (it burnt through $82 million last year) but falls plenty short of its backers' hopes. With a market cap shy of $500 million, it's unlikely backers like KKR (which owned nearly half the firm, pre-IPO, after its big participation in Jazz's $250 million Series B) feel they are getting enough bang for their buck, at least for now.

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