By Lynn Cowan
DOW JONES NEWSWIRES
The U.S. initial public offering market provided mixed receptions for two new deals Thursday, closing out a week that clearly indicated investors aren’t whipping themselves into a frenzy for just any new stock.

Infrastructure safety specialist Mistras Group Inc.’s (MG) IPO found some stability Thursday morning after a shaky opening, while an offering from biopharmaceutical firm Omeros Corp. (OMER), sank like a stone.

Mistras and Omeros capped an uneven week for IPOs in the U.S. Two big deals on Wednesday – Banco Santander Brasil S.A. (BSBR, SANB11.BR) and Verisk Analytics Inc. (VRSK) – encountered dramatically different reactions from investors, with Banco Santander ending the day below its IPO price and Verisk making double-digit percentage gains, rising 24%.

While the performance gap for Mistras and Omeros wasn’t as striking, it sent a stern message that investors aren’t piling into U.S. IPOs indiscriminately. Mistras, which assesses the safety of large infrastructure such as nuclear power plants and bridges, opened below its $12.50 IPO price but rebounded to a moderate gain, trading recently at $12.90, up 3%.

Omeros, an unprofitable biopharmaceutical company with no Food and Drug Administration approvals for the drugs it is developing, dropped sharply at the open and remained low, trading recently at $8.93, down 11% from its $10 IPO price.

Mistras’ IPO priced below the target underwriters had set, while Omeros sold at the bottom of its range, indicating both had to hustle to drum up interest in their deals.

Mistras, which ends its fiscal year May 31, has demonstrated fast growth in annual revenue, increasing 37% to $209 million in 2009. But its operating income declined 9% due to a legal settlement with former workers claiming California labor code violations, and an increase in allowances for doubtful accounts after a large customer filed for bankruptcy.

Mistras estimates that revenue in its first quarter of fiscal 2010 will increase, but its operating income will decline due to a less profitable revenue mix as a result of the economic downturn, a shift that it expects to continue in the near-term.

The company, of Princeton Junction, N.J., was founded by a group of former AT&T Bell Labs researchers in 1978, and operated as Physical Acoustics Corp. until it reorganized into Mistras in 1994. Of the total shares sold, 2 million came from private owners and won’t benefit the company; sellers include Chairman and Chief Executive Sotirios J. Vahaviolos, several other executives and private equity funds affiliated with Altus Capital Partners Inc. and Thayer Hidden Creek.

Seattle-based Omeros focuses on drugs that treat surgical inflammation; its most advanced product in development is in stage three clinical trials, seeking FDA approval. The only revenue coming in the door is from grant funding, and the company warns in its prospectus that it expects its losses to grow as it adds more employees this year.

Although neither deal was a runaway hit, the fact that Omeros could price at all is a notable and positive sign for the U.S. IPO market. Unprofitable drug developers that are still in clinical testing are risky investments, and they almost always trade poorly, even during strong markets. Their investor base evaporated in the midst of the global stock market crisis last year; the last time a pre-FDA company made it to market was in March 2008, when biotech Bioheart Inc. (BEAT) went public, losing 5% on its first day.

Mistras’ deal was managed by JPMorgan Chase & Co. (JPM), Bank of America Corp.’s (BAC) Bank of America Merrill Lynch, and Credit Suisse Group (CS). Deutsche Bank AG (DB) managed Omeros Corp.’s.

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