Biotech industry watchers unfortunately have yet to give us good news about the direction of the industry. 2011 finished as another disappointing year for IPOs, and 2012 is anticipated to bring us more of the same. The prevailing wisdom continues to be that today’s investors have more of an appetite for investing in social media than biotech.
Fierce Biotech reported that only 10 U.S. biotech companies went public last year, which is down from just 13 in 2010, listing these companies as follows:
- Clovis Oncology for $130 Million
- Sagent Pharmaceuticals for $92 Million
- Fluidigm for $76.5 Million
- Endocyte for $75 Million
- Tranzyme Pharma for $54 Million
- Horizon Pharma for $49.5 Million
- New Link Genetics for $43.3 Million
- Paciri Pharmaceuticals for $42 Million
- BG Medicine for $40.25 Million
- AcelRx for $40 Million.
Genetic Engineering Biotechnology News (“GEN”) counted 13 IPOs in 2011 and 16 in 2010, apparently including biofuel companies in the list, and reported that “of the 20 biopharma IPOs now trading below their IPO price, nine lost more than half of their share price, while eight lost between 26-50%, and other three between 1$-25% of their share price.”
The consensus was clearly that the outcome of these IPOs was at best lackluster and certainly not what the companies had hoped for.
Unfortunately, 2012 is not expected to be any better. GEN is reporting that G. Steven Burrill projects that a mere 25 biotechs worldwide will complete IPOs in 2012.
What biotechs are anticipated to be on that list?
Investorplace and GEN both are reporting that Verastem, an oncology therapeutics company, intends to go public in 2012 and to sell 4.5 million shares at a range of $9 to $11. In addition, GEN is reporting that five other biotech companies plan to go public:
- Argos Therapeutics, a company focusing on metastatic renal cell carcinoma and HIV, plans to raise up to $86 Million;
- Cempra Pharmaceuticals, a company having two Phase III products: a pneumonia treatment CEM-101 in three separate studies and a MRS and skin infection treatment CEM-102 in another study, plans to raise $86.25 Million;
- Merrimack Pharmaceuticals, a company having a Phase II lead candidate MM-398, which is a pancreatic and gastric cancer chemotherapy treatment, plans to raise $172.5 Million;
- Rib-X Pharmaceuticals, a company having a Phase III candidate delafloxacin for acute bacterial skin and skin structure infections, plans to raise $80 Million; and
- Supernus Pharmaceuticals, a company having a lead candicate SPN-538 for epilepsy, which received FDA approval in November 2011, plans to raise $100 Million.
All in all, the outlook for biotech IPOs is not expected to improve much in the coming year. Moreover, there is really nothing on the horizon to suggest that we will see any real improvement in the coming years either. In the current economic climate, investors remain dubious about investing in early stage biotech companies, and biotech companies remain nervous about going public for the same reasons. As GEN observed: “[The] way to measure the health of the biopharma IPO market for this year will be to see how many companies backtrack on plans to go public. Since 2010, six biopharmas have withdrawn their IPOs.”
I think I can safely speak on behalf of California’s biotech community when I say that we are looking for the light at the end of the tunnel. Until that happens, however, biotech companies will have to continue to look for other means of raising capital and to focus on acquisitions rather than IPOs as the primary business goal.