Tuesday, August 18, 2009

Biopharma IPO Is a Healthy Sign

The Wall Street Journal reports today that Cumberland Pharmaceuticals had, by traditional standards, a poor initial public offering last week but a closer look at the offering shows success.

Cumberland's revenue grew 25% in 2008. It has another product coming to market soon that could redouble that growth. But 70 times earnings is a dizzying valuation all the same.

Cumberland's product portfolio makes the rich multiple all the more impressive. Its biggest current product, Acetadote, is an intravenous version of a drug treating Tylenol overdoses. The oral form of the drug is generically available. According to the prospectus, protection from competition comes not from patents, but from "trade secrets and proprietary know-how" as well as marketing exclusivity, granted by the U.S. Food and Drug Administration, that expires in 2011.

Will we see Cumberland's offerings pick up for the remainder of 2009 and early 2010?

Biopharma IPO Is a Healthy Sign

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