Biotechnology, Business, Drug Development

Biotech IPOs may still be a bright spot, but the light has dimmed

GenSight has been playing in one of the hottest sectors in biotech, developing new gene therapies for rare eye diseases. But the French biotech never could raise sufficient interest to complete an IPO in the U.S., so now it’s taking its business plan, its prestigious scientific advisers and its deep-pocket investors and trying the game on the Paris exchange, rolling out a much-reduced effort to bag $44 million.

The moral to that story is that it’s harder to pull off a successful biotech IPO these days, no matter how good your scientific pedigree may be. You may have missed that point in the NVCA’s quarterly run of the numbers. The group noted that biotech remains the big bright spot in an otherwise dead slow IPO market, with 9 venture-backed IPOs raising $533 million in the quarter.

That only looks good in comparison to the rest of the tech field and the dormant first quarter, as companies adjusted to the new, harsh reality of a turbulent bear market.

This time last year, though, with the IPO window wide open for the third straight year, the NVCA counted 14 biotech IPOs that raised $1.24 billion.

M&A has swelled, jumping from two deals with disclosed numbers totaling $843 million in Q2 2015 to 4 disclosed deals worth $6 billion in Q2 2016. M&A always tends to gyrate based on a single deal, though. AbbVie paid $5.8 billion in cash to nab Stemcentrx, and there you have the difference in the numbers.

As we noted in an earlier report, it helps these days if you’re in gene editing. CRISPR has now grabbed the public’s attention, and CRISPR Therapeutics is clearly getting ready to pull the trigger on the latest in a string of offerings in this field. That’s an offering that can still excite rick-averse investors, though the company will also likely have to add a considerable amount of insider buying interest to make it across the finish line.

These days, when you want to pull off a biotech IPO party, you have to be sure to get all your richest friends to participate.

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John Carroll, Editor and Co-Founder

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