An IPO That Hit the Bull's-Eye

There is no question that Sirtris Pharmaceuticals (NYSE:SIRT) is playing out to be one of the top-performing IPOs in the biotech/pharmaceutical field in 2007. As of yesterday's close, shares were up roughly 64% from when the company went public in May. The company is producing data to justify the hype.

A few weeks back, the company published a study in the scientific journal Cell showing promising results in its efforts to treat aging-related diseases. And just yesterday, the biopharmaceutical company reported positive preclinical results for its oral drug candidate aimed at treating eye disorders. At a meeting of the American Neurological Association, the company presented results demonstrating how its SRT501 drug was shown in an animal model to be beneficial in combating a disorder of the optic nerve that can cause a complete or partial loss of vision.

Investors in IPOs of small-cap companies such as Sirtris must be ready for volatility. But for Fools willing to take on a high degree of risk, the investments present an opportunity for tremendous upside potential. For example, China Shenghuo Pharmaceutical Holdings (NYSE:KUN), a small-cap pharmaceutical company that went public in July, has almost tripled in price. However, it was trading down 10% in midday trading action today with no new news to report. WuXi PharmaTech (NYSE:WX) is another example of a small-cap biopharmaceutical company that is subject to volatile swings. The stock has nearly doubled since going public in August and has similarly experienced 10% swings over the course of a day on no news.

Volatile or not, Sirtris has been selected to ring the opening bell for the Nasdaq this coming Tuesday. The recognition is well-deserved. The company has already been ringing in major-league gains for its shareholders in just its first five months of trading.

For related Foolishness check out:

• 5 Hot IPOs
• How to Spot the Next Hot IPO