Investors can't seem to get enough of the huge payoff potential of investing in the Biotechnology industry, as the industry starts to raise capital once again various types of equity offerings.
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The Biotechnology industry is known for its binary investment outcome, meaning an investor either gets a huge payoff when the company reports a successful trial or product approval, or the company slowly spends all of its cash raised and then it product turns out to be ineffective or harmful to those taking it. This usually leads to a crash in the stock price, as most tend to be single-product companies.
The frustrating thing, from an analytical perspective, is that it is almost impossible to determine the outcome of these trials, even if one had a PhD in a medical or scientific field.
MAP Pharmaceuticals, Inc. (Nasdaq:MAPP) issued 3.5 million shares in a secondary offering at a price of $9.70, raising about $31.4 million. The product that the company has closest to market is LEVADEX, which is designed to treat migraine headaches. The product is inhaled by the patient and is in Phase three trials.
Inspire Pharmaceuticals, Inc. (Nasdaq:ISPH) issued 22.2 million shares at $4.50 per share, raising about $100 million. Investors must have liked this one because the offering was increased from the original $80 million expected. Inspire is active in the Ocular market and has two products, AzaSite and Elastat, both ophthalmic solutions for use in the eyes.
Investors are actually getting some established products with this company as it actually has revenues currently.
ARIAD Pharmaceuticals, Inc. (Nasdaq:ARIA) received $35.6 million from investors after expenses in its offering. ARIAD is active in the cancer market, and has three drug candidates. Its most advanced product is Ridaforolimus, which is in Phase three trials to treat advanced sarcomas.
The company is partnered with Merck (NYSE:MRK) to develop this drug, and the presence of a large established company probably gives comfort to many who got in on the offering.
Micromet, Inc. (Nasdaq:MITI) raised $75 million from investors after expenses. The company has ten products in its pipeline, but none more advanced than Phase two clinical trials. The company has marketing agreements with Merck on several of these drugs, however, once again giving investors a little bit of confidence on their success.
It seems that almost every day, if one looks at the biggest gainers and loser's list on either the NASDAQ or NYSE, a biotechnology company with an impressive sounding name is on either one of these lists. This high potential return keeps investors coming back to invest in this sector. (For additional reading, check out The Ups And Downs Of Biotechnology and Chasing Down Biotech Zombie Stocks.)
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