The climate seemed right for biotechs to go public at the beginning of 2017. Well, maybe not right, but definitely better than the previous year. Coming out of the annual J.P. Morgan Healthcare Conference in January, there was optimism small drug developers would turn up the heat on initial public offerings (IPOs) after a lukewarm 2016.

And at first that's what happened. Three companies – AnaptysBio, Jounce Therapeutics and ObsEva SA – made the leap to go public before February rolled around. Two others, Visterra Inc. and Braeburn Pharmaceuticals, were scheduled to pull the trigger any day. Compare that to 12 months prior, when Editas Medicine delivered the year's debut IPO, not just for healthcare but for all industries, on Feb. 2.

The strong start didn't last long, however. Visterra and Braeburn withdrew their filings, and just one other biopharma, Valeritas Holdings, went public before March 31. Though the IPO market as a whole has started to rev up, industry followers expect biotech's more tepid tempo to continue throughout 2017, resembling the period leading up to the record levels seen in 2013 and 2014.

What happened in Q1?

Donald Trump's election victory was largely an enigma for pharmaceutical companies. While many saw his presidency and the likely corporate tax reforms it would bring as preferable to alternative outcomes, Trump's assertion in a press conference early in the year that drugmakers were "getting away with murder" shook their confidence as well as the markets.

But as Trump settled into Washington, something even more stirring did as well. The issue of drug pricing sparked consumer and Congressional outrage as Valeant, Mylan, Marathon and others took turns making headlines for their high cost therapies. With state and federal officials moving rapidly on legislation aimed at increasing transparency and punishing price gouging, the dialogue around healthcare expenses has deterred investors from biotech companies, according to Kathy Smith, principal at Renaissance Capital.

"The IPO market hasn't really been a good spot for biotech, biopharma at all," Smith said to BioPharma Dive. "There's locked in liquidity for many of the investors in the private biotech segment. I'd say that probably throws a big bucket of cold water on everybody."

Last year, life sciences was the only industry to have companies — 10 in total — go public during the first quarter. But many fear the ripest fruit has been picked, particularly during biotech's heyday in 2014, when 102 healthcare businesses conducted IPOs.

"There's been a feeling that many of the best companies have already come out as the window was wide open in biotech," Smith said. "Biotechs were the only issuers that could get done in the first four months of 2016, and partly it's because many of the offerings were done with the help of insiders which has really limited public participation."​

Of the four biopharmas that went public in 2017, only half have stock trading above its initial pricing.

AnaptysBio, an antibody drug creator, and Jounce, an immunotherapy provider, were both in the top five largest IPOs for U.S. based companies, according to a Venture Monitor report from financial data firm Pitchbook. AnaptysBio sold 5 million shares at $15 apiece while Jounce sold 6.5 million shares at $16 apiece. As of April 12, their stocks respectively traded for $25.38 and $22.34 per share – two of the strongest performing IPOs of the year.

Meanwhile, women's health-focused ObsEva and medical device maker Valeritas aren't doing so well. ObsEva priced its stock at $15 per share and it now trades at around $8 per share. Valeritas initiated a 1/8 stock split on March 15 and began trading 5.25 million shares of common stock priced at $10 apiece on March 23. The company's shares have recently gone for about $6 apiece.

Smith noted the first two drugmakers have existing partnerships with big biotech Celgene, whereas the last two are working in very competitive markets, though she could not say whether those factors weighed on the companies' stocks.

On the horizon

Whether the rest of 2017 will shake out for IPOs like the first quarter is hard to predict.

M&A, for instance, can cork the private-to-public pipeline; a business agreeing to get acquired probably has given up the idea of snagging its own ticker symbol. It just so happens too that some industry experts foresee 2017 being a banner year for pharma deals.

Things could uptick, however, and one place to look for guidance is the general market.

On the venture capital front, a leveling-off of investment could actually prompt more IPOs, especially when M&A isn't feasible or companies are taking time to build up their value.

"With late-stage funding widely available in 2015 and early 2016, this paused the IPO path for some companies," according to the Pitchbook report. "However, with such funding not as accessible in the current climate, these companies may increasingly look toward an exit when the time is right."

"The more valuable or the higher priced a company gets, you might take out some of the people who would have been able to get a deal done," said Pitchbook senior analyst Nizar Tarhuni. "And so then you just have to look at the IPO market as something that's a bit more viable."

The IPO market itself can provide clues as well.

An influx of filings often characterizes a healthy IPO space. If a company is willing to go through the burden of compiling their filings, getting their books in order and preparing management for the transition, it's likely not a casual endeavor.

"If you're going to go through with a filing, it's a fairly length process and it's not something you kind of just do," Tarhuni said. "When you see a rush of filings, it's genuine interest that you're seeing."

While the number of life science filings between January and April hasn't been as large as last year's, it's still fairly robust. Adgero Biopharma, for instance, submitted its filing in February along with Valeritas. In March, Akcea, Tocagen and Biolabmart revealed theirs, and Therapix Biosciences priced its shares. And in April, Biohaven, Urogen Pharma, Verona Pharma and Zymeworks added to the list.

"It's very hard to tell in the pipeline," Renaissance's Smith said, adding that a handful of those companies on tap to IPO this year – Tocagen, Akcea, Verona and Zymeworks – are "a pretty good list of names, but it's nothing like what we saw at the top of the biotech craze. It's a little more muted."