Despite Omeros Flop, Trius and Other Biotech IPO Hopefuls Might Fare Better

Trius Therapeutics added its name to the initial public offering queue on Friday, apparently undeterred by the abysmal performance of Omeros Corp., the first true biotech to go public in the current IPO window.

The window (if you can call it a window) was technically opened (if you can call it open) by Cumberland Pharmaceuticals (CPIX) about three months ago. But both Cumberland and the next drug-maker to go public, Talecris Biotherapeutics (TLCR), boast revenue-generating product portfolios, making them poor models for investor interest in true (i.e. money-losing) biotechs.

Then came Omeros (OMER), the first developmental-stage drug-maker to test the IPO waters. And according to Renaissance Capital, Omeros has been the worst performer of all 42 U.S. companies to go public this year, falling 36 percent in October, the month of its debut.

A bad deal like that can cause an IPO window to slam shut. It happened in early 2002, when DOV Pharmaceutical priced its IPO at the bottom of its recently-lowered range and immediately dropped 30 percent, ruining the market until late 2003. DOV now trades at two cents on the Pink Sheets — and the DOV legacy is why a lot of VCs are making noise these days about how bankers need to police themselves and only bring high-quality companies to the public market.

Yet Omeros — a holdover from the last IPO window that makes generic combo drugs for surgical applications — isn’t the ideal picture of a top-quality biotech IPO. Maybe that’s why other biotechs remain optimistic; perhaps they think the first true biotech IPO of this window is yet to come.

It could come from Anthera Pharmaceuticals, which is preparing for Phase III trials with a statin add-on for acute coronary syndrome. Or from Phase III adult stem cell company Aldagen, which also has IPO paperwork on file with the SEC.

And now Trius has joined the list of contenders. The biotech is poised for Phase III trials with an antibiotic intended to improve on Pfizer’s Zyvox (linezolid) and has filed to raise $86 million. Investors may be willing to fork it over, too, considering that Trius’s drug has sparked lots of partnering interest. Big dollar drug deals don’t come around every day for buy-siders, especially now that drugs are often outlicensed at early stages, when their creators are still privately-held.