Alnylam IPO Joins List of Biotech Disappointments

Biopharmaceutical firm Alnylam launched an initial public offering of stock late last month at $6.00 per share, significantly lower than its original asking price of $10 to $12 per share. The firm, which specializes in RNA interference therapies, is likely to net about $30 million as opposed to the $55 million it targeted.

Alnylam was the third biotechnology company to lower its IPO price in May. Acadia Pharmaceuticals launched at $7.00, having initially targeted $12 to $14 per share. And Critical Therapeutics dropped its price to $7.00 per share from an anticipated $11 to $13.

May’s shortfalls follow a wave of enthusiasm last year in the biotech sector that prompted industry analysts to predict an “open window” for IPOs in 2004. G. Steven Burrill, CEO of life sciences merchant bank Burrill & Co., says troubles in Iraq, energy costs, and concern over the economy are at the root of the recent pullback. The Burrill Biotech Select Index of stocks dropped 14% in May, while the broader NASDAQ stock market was up 3%.

Burrill says biotech stocks fared worse partly because they compose “a highly inefficient market,” with 350 publicly traded companies in the U.S. and little individual analyst coverage. “Just one home run—where the stock jumps 20% in a day—could reinvigorate the IPO market, but continued stagnancy may challenge the open window,” he says.