Despite sluggish IPO market, biotechs continue to lead the way
- Life sciences firms were responsible for most of the initial public offerings in the second quarter, although activity for both biotech and U.S. markets remained sluggish, according to a new report from Thomson Reuters and the National Venture Capital Association.
- Nine of the 12 IPOs in the second quarter were for life sciences companies, raising a total of $534 million on public markets.
- Venture-backed M&A deal value increased sharply from the first quarter, fueled by AbbVie’s $5.8 billion acquisition of Stemcentrx.
Despite the relatively strong showing of biotech in venture-backed deals and M&A activity in Q2, the overall pace of IPOs has continued to decline compared to prior years. But biotech is still luring venture funding, even as money in other sectors dries up.
"Biotech IPO activity continues to be the bright spot in an otherwise sleepy IPO market for venture-backed companies," said Bobby Franklin, president and CEO of NVCA.
The best-performing biotech IPOs from the second quarter were Reata Pharmaceuticals and Syros Pharmaceuticals, which were up 80% and 55%, respectively, according to Fierce Biotech.
Despite the good news for the biotech industry in Q2, the overall trend for IPO funding is down. Total venture capital investments in biotech over the five years between 2004 and 2008 totaled $21.5 billion. But between 2008 and 2013, investment fell to $16.7 billion., according to data from BIO.
The venture-backed market for biotechs appears to be favoring later-stage deals, while backing fewer recipients. Despite this, companies with specialized platforms, especially in oncology, are still attracting investors.
- National Venture Capital Association Venture-Backed Biotechnology Companies Continue to Lead Charge to Public Markets as Tech Companies Remain on Sidelines