Price up on Replidyne stock

Louisville biotech firm downsized IPO, cut cost per share

By Rachel Brand, Rocky Mountain News

June 29, 2006

Investors couldn't decide if Colorado's latest biotech stock was a placebo or the real thing.

Louisville-based Replidyne went public Wednesday selling 4.5 million shares at $10 apiece, raising $45 million before expenses.

The stock rose 10 cents on its first day, to $10.10.

Including company-owned stock, Replidyne has a $262 million market capitalization, placing it in the middle of publicly traded Colorado companies.

Replidyne didn't return calls for comment.

The drug developer, which makes anti-infectives, also cut the price to $10 - it originally sought $14 to $16 a share - on Wednesday and trimmed the offering size to 4.5 million shares from 5 million shares.

IPO downsizing, or all-out withdrawal, has not been uncommon since the Federal Reserve Bank raised interest rates May 10, sending the Nasdaq down 9.5 percent.

The markets were also unusually wobbly in anticipation of another likely Fed rate hike today.

"The other problem is, (Replidyne) has great prospects but it doesn't have revenue," said Francis Gaskins, president of IPOdesktop.com. "The market doesn't know how to evaluate things that don't have earnings."

Typical of a biotech firm, Replidyne's losses have piled up. It lost $15.3 million in 2003, $22.8 million in 2004 and $40.9 million in 2005.

But unlike many biotechs, Replidyne has earned $60 million in upfront licensing fees from Forest Labs before having a marketable product. The Food and Drug Administration is reviewing Replidyne's application for Orapem, an oral antibiotic.

Replidyne says it will use $5 million of the IPO's proceeds for the potential commercial launch of Orapem. Another $20 million will fund trials for Orapem's additional indications, and $12 million will fund research on another drug candidate.

Replidyne Inc. RDYN:Nasdaq

$10.10, + 10 cents

brandr@RockyMountainNews.com or 303-892-5269