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IPO investors take a break
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August 22, 2000: 5:35 p.m. ET
Biotechnology firm Ista manages small gain ahead of Labor Day holiday
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NEW YORK (CNNfn) - Biotechnology company Ista Pharmaceuticals, the only new initial public offering to debut Tuesday, had a hard time inspiring new issue investors who seemingly had already skipped town for the Labor Day holiday.
The Irvine, Calif.-based company closed its first day of trading up 1/4 to 10-3/4, after trading in a narrow range all day.
Ista is one of only three deals expected to trade this week, and IPO analysts said the traditional slowdown ahead of the Labor Day weekend is diluting first-day gains. The slew of new issues in the past month also signals that the market for initial public offerings may need a break, said David Menlow, president of IPOfinancial.com.
"Market conditions are such that this deal needed to be cut 25 percent," Menlow said. "The IPO market is in need of a megadose of Geratol."
Investors look toward future results
Ista Pharmaceuticals (ISTA: Research, Estimates), a holdover from last week, raised $31.5 million by selling 3 million shares at $10.50, below its expected range, via underwriters led by CIBC World Markets. Ista Pharmaceuticals had planned to offer 4.5 million shares at $13 to $15 each.
The company, which is the only biotech firm debuting this week, is developing drugs to treat eye conditions and diseases. The company has developed Vitrase to treat severe vitreous hemorrhage, a sight condition, and diabetic retinopathy, the leading cause of adult blindness in the United States.
Like many biotechnology companies hitting the IPO market, Ista Pharmaceuticals has yet to produce a product to sell.
However, the company's Vitrase drug is in phase II clinical trials for treatment of severe vitreous hemorrhage. Ista Pharmaceuticals also inked a deal with Allergan Pharmaceuticals Ltd. In which Allergan would market and sell Vitrase in the United States and all international markets, except Japan and Mexico. After the IPO, Allergan Pharmaceuticals will hold a 7 percent stake.
The company incurred net losses of $10.7 million and no revenue for the six months ended June 30. 
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