Ironwood Pharma CEO Peter Hecht Breaks Silence on Company’s Big Biotech IPO
(Page 2 of 2)
window of opportunity with respect to where the drug was in clinical development,” Hecht says, “[the IPO] would afford us a very good opportunity to communicate effectively [and] to add to shareholders that we already had.”
One of the company’s big priorities during the IPO process was to find new backers that were committed to hanging onto their shares long enough for the company to achieve some of its goals over the next five years, Hecht says. (Investors that trade in and out of biotech firms’ stocks in a hunt for quick returns can hurt those companies’ share values and limit their ability to raise more funds.) The IPO also boosted the company’s cash stockpile to $320 million, he says, enough to fund the company for another five years.
Still, Ironwood had to overcome a hurdle or two en route to its public debut. After testing investors’ appetites with a proposed price range for the IPO of $14 to $16 per share in January, the company later reduced those expectations and ultimately priced the IPO at $11.25 per share last month. Hecht says that the hitting the proposed $14-$16 per share pricing target was less important to him than finding new long-term investors.
“We could have set a lower expected [price] range, and maybe that would have led to more excitement about the IPO, and maybe if we had priced it low enough the stock would have popped,” Hecht says. “But that wasn’t our goal.”
To Ironwood’s credit, its stock price has been trending upward since its shares debuted last month and closed yesterday at $14.49—a 28.8-percent increase from its initial $11.25 price.
We’ll see where the stock price is after Ironwood’s next big data event—the release of the results of the pivotal trials in patients with irritable bowel syndrome later this year. Investors have now bet more than half a billion dollars that the company will succeed.