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November 3, 2011
Verastem Goes Public: Why Not?
Doesn't this seem just a bit. . .early. . .for an IPO? In this climate?
Chris Westphal, a founder of Sirtris and a fixture of Cambridge/Boston biotech startup culture, helped to launch a company called Verastem in the middle of 2010. They're concentrating on the role of stem cells in cancer, a very interesting field (and one that a lot of other oncology players are interested in as well). And rather to everyone's surprise, they've now announced that they're going public. No, there's no compound, nothing heading for the clinic in the foreseeable future. They're just going public, presumably because the equity markets are in such a placid, welcoming mood or something.
Their plan seems to be to develop assays based on stable populations of cancer stem cells, and then to find compounds that selectively target them and develop these into drug candidates. Each step of that process is very much an open question, and is most definitely not trivial. It's a very worthy area of research, don't get me wrong - but it does seem odd to be going public at this stage with it, when there's so little for potential investors to evaluate. And it's worth noting that Verastem raised $32 million in financing just back in July. Are they already plowing through that? The IPO looks to raise about another $50 million - is that a sum that just couldn't be brought in via private investors?
Those are other questions will get aired out extensively in the weeks to come. We'll see how smoothly this all goes - and a lot of other small companies will be watching as well. One first reaction hasn't been too favorable: over on Twitter, biotech watcher Adam Feuerstein says "Christoph Westphal is why the clubby, VC-back scratching world of private biotech is derided by public investors". They'll soon get their chance to deride in person!
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