After a long famine, and buoyed by the stock market's overall health over the past 18 months, investors are once again feasting on initial public offerings (IPOs). Prominent among them are biotech firms. The news is good for the cash-starved biotech companies, since they finally have a place to raise money. But the news is not as good for IPO investors, who are getting uncertain returns in the post-IPO aftermarket.

"Although the general markets have been choppy all year and are likely to remain so, the biotech industry has raised $13 billion already in 2004 and close to $29 billion" since this time last year, says Steven Burrill, CEO of Burrill & Company, a San Francisco-based investment bank that specializes in the biotech and life-sciences industries. "Since the IPO window opened in October 2003, 25 new biotech companies have entered the [public] market" in the United States, says Burrill, and...

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