Biotech IPO pricing is fraught with more uncertainty than ever before, say some private investors and executives. It's worth seriously considering the alternatives. Start-Up takes a look at what is wrong with IPO pricing and how alternatives such as reverse mergers, M&A, or Dutch auction IPOs can improve biotech valuations.

Through a reverse merger with Discovery Partners, oncology discovery and development play Infinity Pharmaceuticals will access the public market and Discovery's roughly $70-75 million cash. That the deal won't secure Infinity the kind of market capitalization that the firm's top-notch pedigree and previous private valuations pointed toward merely reflects the market's healthy skepticism for early-stage assets. It also suggests that even for companies as promising as Infinity, reverse mergers are increasingly the smoothest-and in some cases the most lucrative-path to the Nasdaq.

VC firm Oxford Bioscience's deal with Evotec gives its portfolio companies discounted access to the German biotech's screening and chemistry services--but with no obligation.

To address the problem of attrition during lead compound discovery and early development, some large drug firms - Pfizer perhaps both the most vocal and committed -- are banking on file enrichment and selection. Better-informed compound library construction and more efficient lead selection could double the useful hit rate, they say, in effect doubling the number of successful new drug introductions downstream. There's room for combining empirical and rational approaches; for example, combining novel fragments to extend diversity with privileged fragments (or scaffolds) that reflect rational assumptions about drug motifs. For now, however, the proposition of file enrichment is much more theory than reality, until it is shown to actually reduce attrition both before and during clinical development, and so improve productivity.