Analysts surprised by Pharmaxis' early drop

Sydney-based pharmaceutical company Pharmaxis (ASX:PXS) listed on the ASX on Monday after successfully raising AUD$25 million in its IPO last month.

But after opening at a price of $0.57, the company's share price fell sharply to close at $0.45.

Analyst and BioShares editor David Blake said he was surprised at the result, but suggested that the company had satisfied the demand for shares by accepting the oversubscription during the offering.

"I think there's a lot more left in them," Blake said. "You'd still get value for money at a market capitalisation approaching $80-90 million."

The market capitalisation based on yesterday's closing price was $45 million. Stuart Roberts, an analyst at Sydney stockbroking firm Southern Cross Equities, said he believed the offering was pretty good, but wasn't marketed well.

"There wasn't a good storytelling period in the lead-up to the listing," he said.

Roberts added that there was a perception in the market that biotechnology had cooled off somewhat since peaking in September. But he was optimistic that things would take off for Pharmaxis down the road.

Pharmaxis has two products in clinical trials, including Aridol, an inhalant used for measuring lung function, which is undergoing Phase III clinical evaluation, and Bronchitol, an inhaled non-ionic osmolyte based on mannitol, which is in Phase II studies for treatment of cystic fibrosis and chronic obstructive pulmonary disease.

A number of therapeutic products for multiple sclerosis and rheumatoid arthritis are in pre-clinical development.