Biotech IPOs' Iffy Prognosis

Many biotechs' initial public offerings are serving as a cash injection for drug development efforts rather than a payday for investors

Biotech offerings are in remission. Even as small pharmaceutical developers continue to stream toward the public markets, investors are yawning. Too often, initial public offerings for small biotechs offer little short-term upside—and ask investors to take on the major risks of drug development. But recently large pharmaceutical groups have shelled out big bucks for tiny biotechs—making getting acquired more attractive than tapping the public markets for some of the most promising names.

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