In August, Somaxon Pharmaceuticals chose an alternative strategy to raise $30 million, and in June, BioCryst Pharmaceuticals of Research Triangle Park, North Carolina, used a similar tactic to raise $70 million. Both companies raised money through at-the-market (ATM) offerings, a financing tool that was not used at all in the biotech industry as recently as 2005. Since then, ATMs have been rapidly gaining favor. According to the New York-based investment bank Brinson Patrick Securities, which specializes in ATMs, by 2010 the number of ATM offerings had grown to 26 in the biotech sector (raising $184 million), nearly tripling the 9 that took place in 2009. This year there have been 15 so far. Biotechs typically raise capital by selling shares all at once in large tranches and at a fixed price, while relying on value-adding milestones, hoping that the cash can get them through to the next milestone. Instead, with an ATM offering, a company raises capital by selling shares in the open market at the prevailing price over a period of time, with the advantage that the sale of shares can be stopped or initiated at any time. Todd Wyche, founder and managing director of Brinson Patrick, thinks biotechs are shifting their approaches, using multiple financing options. “Instead of an episodic financing, relying on one or two traditional tools, we're seeing them incorporate a more strategic kind of financing strategy,” said Wyche. Not only are ATM offerings more flexible, providing cash when needed, but they are also cheaper than traditional stock offerings in which warrants, underwriter spreads and discounts to the market price are taken into account. ATMs aren't the perfect solution, however. One drawback is that shares have to be dribbled into the market so large amounts of capital can't be raised quickly. But Brinson Patrick has found that issuers can sell 10–15% of the daily volume without adversely affecting the share price. The shares from an ATM offering also end up in the open market where investors may not be interested in holding them long term. Other options, such as standby equity distribution agreements offered by Yorkville Advisors of Jersey City, New Jersey, can provide the same flexibility while getting the shares into the hands of long-term investors (Nat. Biotechnol. 28, 301–302, 2010). Michael J. Nowak, managing director of Yorkville Advisors, explains that as long term–only investors, they are always interested in maintaining a strong share price for the company. “In an ATM, [bankers] do not care, since they pick up their couple of percent commission on the trade regardless of impact or price,” he adds.