Seattle-based biotechnology firm Omeros holds the dubious distinction of having the worst IPO flop of 2009.
The company is in stage III trials for a drug that claims to improve joint function and ease pain after arthroscopic knee surgery [source: Reuters]. Executives were hoping that a cash infusion from the IPO would carry them through until the drug gets approval from the Food and Drug Administration (FDA).
Omeros went public on October 7, 2009 and raised $62 million on a share price of $10. Unfortunately, of the 42 companies that went public this year, Omeros' stock plunged the farthest the fastest in the weeks following its IPO [source: Timmerman]. As of November 2009, the stock price is down 42 percent [source: Yahoo IPO].
Omeros' disappointing post-IPO performance has dashed the hopes of other biotech companies, which are scrambling for cash in a market spooked by the uncertainty surrounding the health care debate in Congress.
It didn't help matters that right before the scheduled IPO, in which Omeros originally hoped to raise $80 million, an ousted chief executive accused the company of fudging timekeeping records for National Institutes of Health (NIH) grants [source: Timmerman].
For lots more information on IPOs, investment woes and the miraculous mess we call the stock market, take a look at the links below.
- Cotriss, David. "Where are they now: eToys.com" The Industry Standard. May 9, 2008.http://www.thestandard.com/news/2008/05/29/where-are-they-now-etoys-com
- German, Kent. "Top 10 dot-com flops." CNET.http://www.cnet.com/1990-11136_1-6278387-1.html
- Gross, Daniel. "The Golden Ass." Slate. June 19, 2007.http://www.slate.com/id/2168650/
- Himelstein, Linda. "Webvan left the basics on the shelf." BusinessWeek. July 23, 2001.http://www.businessweek.com/magazine/content/01_30/b3742060.htm
- Jubak, Jim. "Blackstone IPO is a must-miss." TheStreet.com. April 4, 2007.http://www.thestreet.com/story/10348377/1/blackstone-ipo-is-a-must-miss.html
- Kawamoto, Dawn. "TheGlobe.com's IPO one for the books." CNET News. November 13, 1998.http://news.cnet.com/2100-1023-217913.html
- Kelly, Jason and Keehner, Jonathan. "Schwarzman's 'Perfectly Timed' IPO means Long Wait for Holders." Bloomberg News. June 28, 2008.http://www.bloomberg.com/apps/news?pid=20601087&sid=ab1Xeq8UM0PA&dbk
- Kharif, Olga. "Vonage's Iffy IPO." BusinessWeek. February 9, 2006.http://www.businessweek.com/technology/content/feb2006/tc20060209_519496.htm
- Mullins, John. The New Business Road Test. "Webvan's unsustainable business model." London Business School. August 2007.http://www.venturenavigator.co.uk/content/webvan_case_study
- Petruno, Tom. "China's Shanda Games IPO flops after investors pay up." Los Angeles Times. September 25, 2009.http://latimesblogs.latimes.com/money_co/2009/09/shanda-games-ipo-shanda-interactive.html
- PR Newswire. "Wired Ventures to sell its magazine." May 8, 1998.http://www.encyclopedia.com/doc/1G1-20572747.html
- Reardon, Marguerite. "Investors sue Vonage over IPO." ZDNet. June 5, 2006.http://news.zdnet.com/2100-1035_22-148306.html
- Reuters. "Biotech Takes It on the Chin in October." November 2, 2009.http://www.reuters.com/article/pressRelease/idUS162014+02-Nov-2009+PRN20091102
- Reuters. "Shanda says its revenue growth to outpace industry." Novmber 2, 2009.http://www.reuters.com/article/americasIpoNews/idUSSHA12631720091102
- Sandoval, Greg. "Kozmo postpones IPO, lays off 24 employees." CNET News. June 19, 2000.http://news.cnet.com/Kozmo-postpones-IPO,-lays-off-24-employees/2100-1017_3-242111.html
- Shim, Richard. "TheGlobe.com to cut staff, fold sites." CNET News. August 3, 2001.http://news.cnet.com/2100-1023-271110.html
- Shwiff, Kathy. "Citi, UBS, Deutsche Fined Over Vonage IPO." The Wall Street Journal. September 24, 2009.http://online.wsj.com/article/SB125363508003831103.html
- TheGlobe.com. "About Us"http://www.theglobe.com
- Timmerman, Luke. "Omeros, Worst Performing IPO of 2009, Casts Shadow Over Other Aspiring Biotechs." Xconomy. October 27, 2009.http://www.xconomy.com/seattle/2009/10/27/omeros-worst-performing-ipo-of-2009-casts-shadow-over-other-aspiring-biotechs/
- Useem, Jerry. "All Dressed Up and No IPO." Inc. February 1, 1998.http://www.inc.com/magazine/19980201/867_pagen_2.html
- Wolverton, Troy. "Pets.com latest high-profile dot-com disaster." CNET News. November 7, 2000.http://news.cnet.com/2100-1017-248230.html
- Yahoo! Finance. "IPO Performers"http://biz.yahoo.com/ipo/perf_l12.html
During volatile periods in stock markets, exchanges will often employ 'circuit breakers' to keep stock prices from falling too far too fast.