Tuesday, August 11, 2009

Cumberland's IPO: Is It the Day After the Day After Tomorrow?

Well, well, Mr. IPO. It has certainly been a while. You don't call, you don't write ...

Cumberland Pharmaceuticals said late last night that it priced 5 million shares at $17 apiece for a gross haul of $85 million (the company will net closer to $75 million after expenses and "discounts" and could bring in more money with a 750,000 share greenshoe--ah, the IPO lingo returneth too). The IPO is the first "biotech" new issue in a couple years.

Cumberland isn't exactly a biotech, of course, it's a specialty pharma. It markets a laxative and an antidote to acetaminophen overdose, and recently gained approval for an IV formulation of ibuprofen. It licenses in drugs that are either already marketed or near-market, and isn't burning through wads of cash on drug discovery. In short, Cumberland is exactly the kind of small pharma that you'd think would be able to IPO after such a long break in the action.

We have been noticing the uptick in follow-on offerings (something we'll talk more about in our financings of the fortnight column later this week) and had wondered whether we'd see an uptick in IPO filings. Cumberland's success has been a long time coming--more than two years ago it estimated it would price the offering at $14-16/share, and a lot has happened since then, not least the approval of Caldolor (that's the injectable ibuprofen) in June 2009. Still, today's price is $2 less than the low end of the range the company was hoping for. But just maybe it will also contribute to this emerging thaw. (Emdeon, an IT services play--they do roughly half the electronic medical billing in the U.S.---which also plans to price it IPO this week, can only hope.)

Just don't expect a Spring flood.

image by flickr user slack12 used under a creative commons license.

No comments: