The biotech IPOs keep coming at chart-topping levels — with no slowdown in sight
Another week, another string of new biotech IPOs — and biotech IPOs pricing at record levels.
In the US, two more early-stage companies broke through the $200 million mark. The synthetic lethality-focused Repare Therapeutics upsized its IPO once from $16 to $18, to $18 to $20, and then priced at the high end to fetch $220 million. Forma Therapeutics, partnered with Bristol Myers Squibb and focused on sickle cell disease, also set at $16 to $18, sold at $20 and ultimately fetched $278 million.
Meanwhile, in South Korea, SK Biopharmaceuticals, a subsidiary of the SK holdings conglomerate and maker of the epilepsy drug Xcorpi, priced at the top of its range to collect $794 million. It was the largest public offering in the country since Celltrion Health earned $900 million in the summer of 2017, per Reuters, although it fell a few dollars short of what earlier reports had predicted.
The latest pair of raises on the US exchange add to last week’s goldmine, when Avidity, Vaxcyte, and Generation Bio each cleared $230 million despite not one of them having put a drug into human testing. The boom appears to be at least in part a product of the pandemic, as investors weary of the other corners of a stunted economy have poured money into companies developing Covid-19 drugs and allowed private biotechs to go public at soaring rates.
The last two weeks alone have seen more large raises for preclinical biotechs than the last three years combined. Over that time, only two companies raised over $150 million that early in their development, according to Renaissance Capital.
The trend toward larger rounds for the early stage companies, though, predates the pandemic, as public investors join venture capitalists in their increased willingness to make large bets on promising, albeit protean, science. Beam Therapeutics, Black Diamond Therapeutics, Revolution Medicines, and Passage Bio all raised over $180 million in January and early February.
Investors also signaled their belief in biopharma by backing Royalty Pharma’s record $2.2 billion IPO. Royalty Pharma doesn’t make drugs. Instead, it buys up long term royalties for investigational and approved therapies, meaning for investors it acts as something akin to an index or portfolio. It’s been a lucrative business so far, and in backing it, investors essentially made a bet that making new drugs in general would continue being a lucrative business.
Excluding Royalty Pharma, there’s now been at least 8 $200 million biotech IPOs in the first half of 2020. That compares to 5 through all of 2019, according to data compiled by Renaissance Capital.