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Two Drug IPOs Get Weak Reception

NitroMed drops around 18% on its first day of trading, while Pharmion slips around 2%.
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Two drug manufacturers got an ill reception on their first day of trading Thursday, in the latest sign that new-issues investors have a weak stomach for unprofitable companies.

NitroMed

(NTMD)

plunged $1.94, or 17.6%, to $9.29 after pricing 6 million shares at $11 a share -- the low end of its proposed $11 to $13 range.

Meanwhile,

Pharmion

(PHRM)

fell 25 cents, or 1.8%, to $14, having sold 6 million shares at $14 -- the bottom of $14 to $16 range talk.

The weak showings follow more successful debuts last week, when five IPOs rose an average 11.4% on their first days. Two of those companies,

Overnite

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(OVNT)

, a trucking company, and

First Marblehead

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, a student loan processor, were profitable in their latest quarters.

"Other deals outside the bio-anything sector should respond differently," said David Menlow, president of IPOFinancial.com, in a preopening report Thursday. Menlow has been pessimistic about the prospects for the recent slate of biotech IPOs, given investors' still-fragile state of mind.

NitroMed, whose drug BiDil for heart failure is in clinical trials, had a net loss of $6.3 million in the six months ended June 30, 2003, according to

Securities and Exchange Commission

filings. The biotech has an accumulated deficit of approximately $83.6 million. Moreover, NitroMed said that it does not anticipate receiving revenue from BiDil until at least 2006.

Pharmion, a more traditional pharmaceutical firm, is currently marketing two of its drugs for treating blood clots. But the company had a net loss of $27.9 million for the six months ended June 30, 2003.