Tag: IPO

IPO Outlook for Biotech Remains Dreary in 2012

Written by on Thursday, February 16th, 2012

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.

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Biotech Facing a Long IPO Dry Spell

Written by on Monday, November 3rd, 2008

The biotech industry is facing the likelihood of a long IPO dry spell, which could extend beyond what is being forecasted in other industries, according to a report by Reuters.

According to Reuters, the last biotech IPO was in November 2007 with Nanosphere, Inc., which develops diagnostic tests, and in the last few weeks, over half of the biotech companies in the IPO pipeline have dropped out, including drug delivery company CyDex Pharmaceuticals Inc., Xanodyne Pharmaceuticals, which focuses pain management, and Phenomix Corp, which specializes in diabetes treatments. Reuters reports that only  five companies remain in the IPO pipeline.

Instead of IPOs, Reuters reports that biotech companies are continuing to turn to mergers; however, pharmaceutical companies are only interested in biotech companies that have products ready for sale, which means that they need to be past Stage 1 and Stage 2.  Pharmaceutical companies are not interested in investing another five years in research and development right now.  Rather, they are looking for products that can quickly replenish their pipelines.

When the IPO market returns, Reuters reports that biotech companies with marketable therapies for hepatitis C, cancer and Alzheimer’s therapies will be the best prospects for an IPO.

Having said this, Reuters reports that what may delay the return of the biotech IPO is the poor price of biotech stocks, and the fact that the biotech companies who have gone public have not increased their stock prices since their IPO.  Reuters reports:  "Only seven of the 61 biotech companies to have gone public since 2000 are currently trading above their IPO prices."

Thus, it appears that biotech is headed for a long IPO dry spell that is not likely to change course, until after the economy picks back up and the industry can show that IPOs make financial sense.   In the meantime, biotech companies will have to continue to rely on alternative exit strategies.

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