(Reuters) – Investors on Wednesday held on to their reputation of being hard to please.
The shares of drugmaker Ironwood Pharmaceuticals Inc (IRWD.O) raised less than expected, although they did close 3.6 percent above their initial public offering price on their Nasdaq debut.
And Boutique investment bank Imperial Capital Group Inc (ICG.N) postponed its IPO altogether due to “market conditions,” according to an underwriter.
Investors have proved risk-averse so far in 2010 and are hesitant to invest in unproven companies, especially if they are not profitable, analysts have said.
Ironwood has partnerships with Forest Laboratories Inc (FRX.N) and Almirall SA (ALM.MC). It has reported losses each year since it was founded in 1998. It has not yet brought a drug to market.
Ironwood shares closed at $11.65, up from the IPO price of $11.25, on its Nasdaq debut. The company sold 16.7 million shares and raised about $187.5 million. But it raised about 25 percent less in its IPO than it hoped to, according to an underwriter. Ironwood planned to sell shares for between $14 and $16 each.
The shares started trading around 12:40 p.m. EST (1740 GMT) after a delay.
Cambridge, Massachusetts-based Ironwood has one drug — for chronic constipation and irritable bowel syndrome with constipation — in clinical development, but does not have regulatory approval to sell it in the United States or abroad.
The company will use the net proceeds from the IPO to fund drug development and commercialization and for general corporate purposes, it said in a regulatory filing with the U.S. Securities and Exchange Commission.
Los Angeles, California-based Imperial Capital, which postponed its IPO, had hoped to sell 6.7 million shares for between $15 and $17 each, raising about $106.7 million, at the midpoint in a downsized deal.
Imperial offers sales and trading services to institutional investors, a range of investment banking advice and capital markets and restructuring services to middle market clients.
The company more than doubled profits in the first nine months of 2009 to $13.9 million, but said in its prospectus that most of its investment banking engagements are single deals and not ongoing relationships.
Investment banking accounted for about 36 percent of revenue in the nine months ended Sept. 30.
JP Morgan, Morgan Stanley and Credit Suisse led the Ironwood IPO. They have the option to buy an additional 2.5 million shares. Bank of America Merrill Lynch, JMP Securities, and Imperial Capital led the Imperial IPO. (Reporting by Clare Baldwin in New York; additional reporting by Phil Wahba and Megan Davies; editing by Tim Dobbyn; Robert MacMillan and Andre Grenon)
peHUB Note: The company is backed by Ridgeback Capital Investment, with a 13% stake, Venrock (11%), Polaris Venture Partners (8%) and Morgan Stanley (7%). Ironwood raised $323 million in venture funding between 1998 and 2009.