The IPO Road Show ... from NO

Editor's Note: In the previous issue of The Scientist (12[20]:7, 14, Oct. 12, 1998), we published the first part of an excerpt from NO by Carl Djerassi. We met the chief protagonist of the book, an Indian scientist named Renu Krishnan, who has developed a drug called NONO-2 and a delivery system called MUSA. Guided by Martin Gestler, a hard-charging expert on biotechnology start-up companies, Krishnan has left academic research to found a company called SURYA. The previous extract described the preparation of an Initial Public Offering (IPO) for the fledgling company. In this part, we follow the progress of the "road show," where the IPO is presented to potential investors. We meet I.C. Cantor, a flamboyant, Nobel Prize-winning chemist and chairman of the Scientific Advisory Board of the new venture, who is reluctantly persuaded to join the road show. According to Djerassi, the passage involving Mother Teresa described in the extract is based on a real incident. It is an interesting coincidence that the discoverers of nitric oxide, or NO, as a signaling molecule in the cardiovascular system, were recently honored with the Nobel Prize in physiology or medicine. Sharing the prize are Robert E. Furchgott of the State University of New York at Brooklyn, Louis J. Ignarro of the University of California at Los Angeles School of Medicine, and Ferid Murad of the University of Texas Medical School at Houston. NO, by Carl Djerassi, published by the University of Georgia Press, Athens, Ga. 30602. © Copyright 1998 by Carl Djerassi. Reprinted with permission from the publisher. Carl Djerassi "Road show?" Cantor's disdain rang over the phone. "What's next? A traveling circus? When you first visited me in Chicago, you never mentioned that entertaining financial types during breakfasts at ungodly times or at mega-caloric lunches was one of the functions of the SAB chair. I really can't be bothered. Besides, I'm on a diet. If some serious security analyst wants to call me, you can give him my office number. I'll answer questions by phone." "Private phone calls are precisely what I don't want Cantor--or any other naive scientist--to take," growled Martin Gestler after hearing Renu's report. "During this preregistration phase we have to be very careful and stick close to what's written in the red herring. Don't forget, the red warning label vanishes only after SEC approval--only then does the herring turn into a black-and-white prospectus. Until that day, I don't want any improvisations. Everything should be said in front of witnesses. Convince him Renu. Remind him of his stock option." A successful road show almost guarantees a successful IPO, and that, in turn, converts a stock option into real currency. Money persuades in direct proportion to its perceived value, and Cantor's thirty thousand share option at forty cents per share now stood a real chance of appreciating to a cool half million if the seventeen dollar IPO offering price--so far only whispered in SURYA's boardroom--indeed materialized. Renu whispered the whisper to Cantor, accompanied by diplomatic commentary, the combined effect of which made his subsequent acceptance appear graciously reluctant rather than coarsely greedy. "I.C.," she said in a louder tone after having led him sotto voce through the simple arithmetic, "our first set of meetings will all be in New York and Boston. Dr. Noland, the chair of our MAB, will come with us from San Francisco. It really would be helpful if the chair of the SAB were also there. Even the first couple of days would be very helpful. You do offer panache, you know." "You mean me? Or the Nobel Prize?" Renu wondered about the facial expression on the other end of the telephone line--arrogant? lupine? amused? "The Nobel Prize doesn't hurt," she replied diplomatically. "It would be beneficial if you commented on the potential of tumor-targeted NO-releasers in the cancer field. Remember what Michael Marletta mentioned in your apartment?" "So why not ask Michael?" Renu started to get impatient. "Our audience does not consist of scientists. They don't know who Michael is. Your name--" "Okay," he said. "Two days. New York and Boston. But no more." A pre-IPO road show may very well be a traveling circus, but fund and pension managers, even though they play with other people's money, come to be persuaded, not amused. In the final analysis, their jobs depend on making money for others. The road show started on an auspicious note at an altitude of over thirty thousand feet. The delegation heading for New York consisted of Martin Gestler, Renu Krishnan, Dr. M. L. Noland of Stanford's GYN/OB department, the new chief financial officer David Warbler, and one indispensable member of all road shows: a young hod carrier, responsible for the slides, the overhead transparencies, the handouts and, most important, for collecting the business cards at all stops. That was one way of determining whether the competition had managed to sneak in. Under ordinary circumstances, Martin Gestler would have had them fly economy class, but this time they were accompanied by three representatives from the San Francisco offices of their underwriters. Although only assistant vice presidents--and after all, with a projected forty million dollar IPO, SURYA was comparatively small fry--they would not have been caught dead flying anything but first class. Gestler, who was well aware of the importance of status during this sensitive period, had signed off on first class tickets for all but the audiovisual aide-de-camp. The latter flew steerage on another flight, because having him sit in back on the same airplane would have been boorish. Renu's seat was in the last row of the first class compartment, David Warbler's next to hers. A short, athletic Yalie with a high forehead bordering on intellectual baldness, Warbler boasted a c.v. that featured an MBA from Stanford and four years of investment banking experience on the East Coast; he had recently been brought in by Martin Gestler whose hunter's nose for savvy financial types had quivered at their very first interview. Three years younger than Renu, Warbler was not only smart--in fact, aggressively so--but also the possessor of a highly honed sense of humor. Spending five hours together, undisturbed by phone calls and other interruptions, seemed to both of them a good way of becoming better acquainted. Warbler knew plenty about IPOs and road shows but very little about NO--all in all a situation unlikely to stress their social compatibility. Warbler had just returned from the forward toilet after the plane had reached cruising altitude. "Do you know who is sitting in the first row on the other side?" he whispered to Renu. "Mother Teresa." "You must be kidding!" Renu whispered back. "How do you know?" "Listen, ever since she won the Nobel Prize, her picture has been all over the place. I'm going to try something," he said. "Let's see if she will bless our red herring." Before Renu even had a chance to respond, Warbler had reached into his briefcase for a copy and headed for the front of the plane. Renu saw her short colleague disappear behind the backrest of the empty aisle seat, only to return a few minutes later with an expression mirroring the beatitude of a pilgrim from Lourdes, or possibly St. Bernadette herself. He could barely contain himself. "Listen! She did it! She blessed it! Look!" He pointed to Mother Teresa's scribbled signature across the red print of the red herring's cover page. "I asked her to date it! We'll have to put this into a safe. Renu, quick," he whispered, "give me your copy." With the skill of an origami virtuoso, he folded her proffered prospectus into a passable facsimile of a hat, extracted two twenty dollar bills from his billfold and dropped them in. "I'm starting a collection for Mother Teresa's Calcutta mission." Renu covered her mouth to hide the onset of incipient hysteria. "Quick," he urged her, "I need a couple more bills to hide the text." Only then did Renu notice that Andrew Jackson's expression on the bill staring at her from the depth of the SURYA hat seemed startled. During the next few minutes, Renu felt tears of repressed laughter running down her cheeks as she saw Warbler moving slowly up the aisle, bills of all denominations dropping freely into the hat. "Do you know how much I collected?" he asked breathlessly upon his return. "More than five hundred dollars! Mother Teresa not only blessed me again, but she wanted to keep the hat. I nearly gave it to her when I remembered some of the pictures: the colored representation of the cross section of a penis and the enlargement of a MUSA. Thank God, they weren't on this page." He spread out the crumpled sheet. "But she blessed this one as well!" "David, are you religious?" He grinned. "Only superstitious. How can we possibly lose after two blessings from a virtual saint?" It was difficult to tell whether Mother Teresa, the glamour of penile erection, or the elegance of the scientific presentations was responsible for the success of SURYA's IPO. The breakfast and lunch audiences were so intrigued by the science that only the odd question here or there dealt with financial matters. Any other company's CFO would have felt depressed for days, but David Warbler just sat there, an exalted expression on his face, convinced that he had already made his contribution. Even I. C. Cantor earned his keep, using his legendary pedagogic skills to captivate an audience at the earliest lecture he had ever delivered: a 7:00 A.M. breakfast! He waxed lyrical about the potential of tumor-specific NO-releasers--so much so that Renu decided to initiate an exploratory synthetic program, making a note to brainstorm the topic with Celestine Price. The presence of M. L. Noland turned out to be surprisingly relevant. The audience, virtually all male, could not contain themselves, asking questions that at times departed considerably from penile erection, though never left entirely the area of the groin. Many of the questions dealt with recent newspaper articles on the putative deterioration of male sperm in various parts of the world, including alarming reports of a 50 percent drop in sperm concentration. Using her best gynecological bedside manner and andrological benchside experience, Noland calmed the men. "Relax--at least the New Yorkers among you. Recent studies have shown that average sperm counts are higher in New York than anywhere and have not dropped at all during the past couple of decades. In contrast to Los Angeles," she added, bringing down the house. Still, she qualified her solace by calling for more extensive, carefully controlled epidemiological studies. Deftly, she returned the discussion back to SURYA and its IPO, pointing out that the company's MUSA system was aimed primarily at sexual intercourse, rather than reproduction. "There is plenty of research going on with respect to infertility, in women as well as men. Take, for instance, ICSI." Noland had met the preceding day with Melanie Laidlaw, and they had talked about the genetic implications of widespread use of intracytoplasmic sperm injection. Laidlaw's detailed knowledge of the subject had caused Noland to pick up her ears. University professors always pay attention to the interests of potential dispensers of research funds. But the acronym ICSI had triggered an auditory reflex in Martin Gestler. It reminded him to throw out to the audience a comment about the ithyphallic quality of the company's R and D results--a remark that he had planned ahead of time but that fell totally flat, with one exception. One of the analysts, in his subsequent report to his clients, warned that an apparent side effect of the MUSA was an itchy phallus. After the questions started to come back to SURYA, Gestler never said the word ithyphallic again, in public or private.

The IPO Road Show ... from NO

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