The biotech IPO window finally opened fully in 2010, but investors weren't that interested in what companies had to offer. Many companies priced their IPOs below their proposed range, and the number of biotechs trading under their IPO price is rather astounding.


IPO price

Yesterday's Closing Price

(Decrease) Since IPO

Complete Genomics (Nasdaq: GNOM) $9.00 $7.50 (16.7%)
ShangPharma $15.00 $11.85 (21.0%)
NuPathe $10.00 $8.90 (11.0%)
Trius Therapeutics $5.00 $3.62 (27.7%)
Alimera Sciences (Nasdaq: ALIM) $11.00 $10.21 (7.2%)
Tengion $5.00 $2.74 (45.2%)
CorMedix $6.50 $1.76 (72.9%)
Anthera Pharmaceuticals $7.00 $4.87 (30.4%)
Ironwood Pharmaceuticals $11.25 $10.35 (8.0%)

Sources: Capital IQ, a division of Standard & Poor's, and Burrill Report.

Still, it's not like these are inherently bad companies. Instead,, I take the lower prices as a sign that investors' appetite for risk isn't quite back to biotech's heyday levels yet. Here are three drugmakers that could satisfy investors. Eventually.

The genomic revolution
Investors seem to have a little more confidence in Pacific Biosciences of California (Nasdaq: PACB) than Complete Genomics. The former is actually trading above its October IPO price. When I pitted the two against each other, I came to the same conclusion.

The past decade was about figuring out the function of the genes that were revealed when the human genome was first sequenced. The next decade will revolve around sequencing as many individuals' genomes as possible to learn what the differences do. The two companies are trying to benefit from this new wave of sequencing, although through different business models.

PacBio is developing a DNA sequencer that it sells directly to researchers (and probably at some point your neighborhood clinic). It's a standard razor-and-blade model where PacBio sells an instrument and then benefits from selling reagents to run the machine year after year. PacBio has some stiff competition -- Illumina (Nasdaq: ILMN), Life Technologies (Nasdaq: LIFE), and Roche have been selling DNA sequencers for a while -- but if the specs on its beta model hold for the production line, PacBio should be able to compete well.

Complete Genomics does the sequencing directly for researchers. I worry about the lack of a competitive moat, although it's possible that Complete Genomics will have enough of a head start and eventually be large enough that it can compete on what I see as a low-margin service business.

Maybe next year
Alimera Sciences looked like it was going to pull off the fairytale task of performing an IPO and gaining a Food and Drug Administration approval in the same year. But the FDA decided it needed more information before the agency could approve Alimera's eye drug, Iluvien.

The development-stage drugmaker is hoping to resubmit its application with the new data in the first quarter of next year. Assuming a six-month review, Iluvien could be on the market next year, and Alimera could see its shares well above its IPO price.

Fighting cancer
AVEO Pharmaceuticals
(Nasdaq: AVEO) is also looking to 2011 as a defining year. Its lead drug, tivozanib, is scheduled to read out its kidney cancer phase 3 trial in the middle of the year.

AVEO is also testing tivozanib in a laundry list of other cancers and has a phase 2 cancer drug and a preclinical partnership with Biogen Idec (Nasdaq: BIIB). In the immediate term, though, AVEO's share will be pegged to the results of the phase 3 tivozanib study.

Keep an eye out
Look at any great IPO and you'll see that getting in on the ground floor or after the stock doubled or even tripled didn't affect the long-term returns all that much.

Are any of these three great IPOs? I think it's too early to tell. Waiting to buy may result in giving up some growth, but it'll also help you to see which ones are on the right path.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.