For the past year, it’s been tough for biotech companies to get traction in the IPO market (there were a mere 10 deals in 2011). But today, Verastem (NASDAQ:VSTM) bucked the trend. The company issued 5.5 million shares at $10 each, which was in the middle of its $9-$11 price range. So far in today’s trading, the stock is up over 12%.

Verastem is the brainchild of some of the top oncology researchers in the world, include PhDs Robert Weinberg, Eric Lander and Piyush Gupta. Based on their breakout discoveries, they have developed VS-507, a molecule that kills cancer stem cells. This is a highly aggressive type of cancer that is resistant to conventional approaches.

Current treatments are far from ideal: surgery, radiation, chemotherapy, hormones and so on.  So Verastem is working on next-generation approaches — and this means focusing on cancer stem cells.

The big problem is isolating large numbers of stem cells. But over the years, Verastem has developed proprietary technologies that can do that. The compounds has yet to be put through clinical trials.

The good news for investors is that Verastem’s CEO, Christoph Westphal, has a strong track record. He was the founder of Sirtris Pharmaceuticals, which was sold in 2008 to GlaxoSmithKline (NYSE:GSK) for $720 million.

Still, the risks are substantial. Even with its promising technology, Verastem is in its early stages and could be many years away from commercialization. At the same time, there are tough competitors such as Astellas Pharma, Sanofi-Aventis (NYSE:SNY), GlaxoSmithKline, Boehringer Ingelheim and Pfizer (NYSE:PFE).

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not own a position in any of the aforementioned securities.