Latest Market Developments (IRWD, MS, JPM, CS, ICG)

In the latest market developments, Ironwood Pharmaceuticals, Inc. (NASDAQ: IRWD) has cut the size of its IPO by 30%, which is the biggest price reduction this year for an IPO in the US.

The company is a developing treatment for irritable bowel syndrome and chronic constipation. Ironwood has managed to sell 16.7 million of Class A share at a price of $11.25 per share, according to Bloomberg data. The company was seeking a price of $14 to $16, according to its filing with the SEC on January 20. The IPO values the Cambridge, Massachusetts based company at $1.1 billion. The shares of the company will start trading today.

According to Scott Billeadeau, fund manager at Fifth Third Asset Management in Minneapolis, buyers are going to be a little bit more in control in pricing.

Ironwood’s shareholders include, Morgan Stanley (NYSE: MS), Venrock, Ridgeback Capital Management, and Polaris Venture Partners. The existing investors paid an average of $4.03 per share, prior to the Ironwood IPO. The company had reserved 7 million shares for existing shareholders, according to its filing with the SEC.

The underwriters to the IPO include, Morgan Stanley, J.P. Morgan (NYSE: JPM), and Credit Suisse (ADR) (NYSE: CS). According to the SEC filing, the underwriters will not receive any fees on the sale of shares to existing shareholders.

The company will use the proceeds from the IPO to fund the development of the linaclotide drug, which is a treatment for irritable bowel syndrome and chronic constipation. According to the SEC filing, in the first nine months of 2009, the company spent $58 million on R&D.

The last four months of 2009 saw a revival in IPOs due to the stock-market rally, which was the largest since 1930. Barclays PLC (ADR) (NYSE: BCS) expects that IPOs in the US will triple this year to $50 billion.

However, Chesapeake Lodging Trust, a REIT, that plans to acquire upscale hotel properties has retreated 5.3% since its IPO. With the S&P 500 extending its slump from January to 3.7%, Terreno Realty Corporation (NYSE: TRNO) has shelved its planned IPO, the first one to do so in 2010.

In other development, Imperial Capital Group, Inc. (NYSE: ICG) will start trading from tomorrow, according to data by Bloomberg. Imperial Capital Group is an investment bank based in Los Angeles. The investment bank, a specialist in distressed debt and high-yield securities, has not made any announcement about the pricing of its IPO. Imperial had planned to sell 6.67 million shares in the IPO at a price of $15 to $17 per share.