Epocrates Headlines Big Week for Healthcare IPOs

As many as seven healthcare-related companies were scheduled to go public this week, including closely watched mobile-device application developer Epocrates Inc. A number of non-healthcare-related companies also planned to launch their initial public offerings as well, the busiest week for U.S. IPOs since 2007.

The much-anticipated launch of mobile-app maker Epocrates (NASDAQ: EPOC) was the biggest deal of the week, with its shares leaping 37% in its market debut. The San Mateo, Calif.-based company designs software that allows physicians to easily find information about drugs, health insurance, new devices and other healthcare-related data on their mobile phones.

"They have a million doctors (registered as users) and a lot of those are free apps, so they will want to monetize those eyeballs and that's what people think will happen here," said Francis Gaskins, president of IPOdesktop.com, said in an interview with Reuters. "It's an expectation of internal growth."

Epocrates raised nearly $86 million in the IPO on Tuesday, some 14% more than it had expected, selling 5.36 million shares for $16 each, Reuters reported. The company initially had filed to offer shares in the range of $13 to $15 a share. In its filing, Epocrates said it would use proceeds to pay a preferred stock dividend of about $28.6 million to shareholders, and for general business purposes.

In trading Friday, Epocrates shares closed at $26.51.

Dagnostic-test maker BG Medicine Inc. (NASDAQ: BGMD) of Waltham, Mass., climbed in its first day of trading Friday. Its shares closed at $8.05, up from its offering price of $7 a share. Still, it was down from the originally planned $13 to $15 a share price range. The company, whose lead product tests for a protein that plays a role in heart failure, issued 4.75 million shares, according to an article in the Wall Street Journal.

Orthopedic-products maker Tornier N.V. (NASDAQ: TRNX) and drug developer Pacira Pharmaceuticals Inc. (NASDAQ: PCRX) didn’t fare as well.

Tornier's share price debuted at $19 a share, but by the close of U.S. trading Thursday its shares were down 5% to $18.05 a share. The Dutch company sold 8.75 million shares, raising about $166.25 million in its debut, and its share priced at the low end of its expected $19 to $21 range.

"The (price) action has nothing to do with fundamentals," Josef Schuster, founder of IPOX Schuster in Chicago, told Reuters in an interview. He noted that when an IPO prices at the bottom of its range, it often results in a decline in the share price. "The sentiment within the industry is quite positive, and for the particular deal today I think it's purely a technical reaction," he said.

Pacira's share price traded at $7.02 Friday, little changed from its offering price of $7. The Parsippany, N.J., company sold 6 million shares, nearly two million more than expected, though it had slashed its proposed IPO price from $14 to $16 a share. In afternoon trading Friday, Tornier was at $18.50 and Pacira shares were at $7.03.

Meanwhile, Endocyte Inc. of West Lafayette, Ind., slashed the price of its IPO at the last minute -- and then cut it again.

Initially, the developer of ovarian and lung cancer drugs had planned to offer 5.35 million shares in the range of $13 to $15 a share. On Thursday, the biopharmaceutical company increased its share offering to 10.7 million shares, but cut the price at a price to $7 a share. Friday, Endocyte increased the offering again to at least 12.5 million shares at an estimated price of $6 per share. Its shares will trade on the Nasdaq Stock Market under the symbol “ECYT.”

Endocyte is in the midst of a mid-stage clinical study for its ovarian and lung tumor drug EC145. The drug attaches the vitamin folate to a common chemotherapy to target tumors while avoiding healthy cells, according to a report on Bloomberg. Endocyte plans to use the proceeds of the offering to fund more tests for EC145. Endocyte also has drugs for prostate cancer and inflammatory disorders in its pipeline, according to Bloomberg.

Also slated to debut this week were AcelRx Pharmaceuticals Inc., BioHorizons Inc., and MedQuist Holdings Inc.

MedQuist (NASDAQ: MEDH), a Franklin, Tenn., medical-transcription company, raised $36 million on Thursday on an offering of 4.5 million shares prices at $8 -- below the $10 to $12 a share range it initially proposed. MedQuist had planned to sell 7.8 million shares. Its shares were delisted from the London Stock Exchange’s AIM Market on Jan. 27. Its shares were at $9.05 Friday.

Perhaps in light of the dismal showing for some other healthcare IPOs this week, dental-implant maker BioHorizons postponed its offering Thursday. The Birmingham, Ala.-based company had hoped to raise $90 million by offering 5.6 million shares, in the price range of $15 to $17 a share.

AcelRx, a Redwood City, Calif., maker of a handheld device that delivers medicine to treat pain, plans to raise as much as $81 million, with shares pricing at $12 to $14 apiece.