Affymax, N.V., An Initial Offering

In 1991, Affymax was planning an IPO. The company had pioneered new technology for drug discovery, and planned to develop pharmaceuticals that resulted from using this technology. The company had a very highly regarded team, with an impressive track record. At the time, however, Affymax had minimal revenues and heavy losses – a prospect that was not likely to change in the near future. The company needed cash to continue to fund its development. At the time, companies did not go public until they had demonstrated several years of profitability, so stock valuation and market acceptance of Affymetrix stock were important issues. The case details the preparation for the IPO, and raises questions about how the stock should be valued.