One of the analysts at Signals charted out the equity raised by biotech companies over the past 24 years, illustrating that the numbers have swiftly bounced from a painful crunch in 2008 to a record high that even beat out the "genomics-crazed days of 2000." In 2010 biotechs raised a record $32.7 billion, aside from alliance cash. In 2008, that figure had collapsed to a recession-battered $10.8 billion.
But as the analysis quickly notes, there's a lot more--or less--to that number than you might suspect. While the aggregate cash flow surged in 2010, much of this money was raised by a relative handful of public companies through "other offerings" like convertible debt obligations. Over half of the total--$16.9 billion to be exact--was raised by 15 public biotechs using CDOs.
Now let's go back to 2000, when go-go genomics excitement helped inspire 86 IPOs that raised $7.7 billion. While 2010 was a much better year than either 2008 or 2009 for biotech IPOs, still only 30 companies--18 U.S.-based--raised $2.8 billion. So while the industry can take heart in the overall spike in cash available to biotechs, it's important to remember that investors are still primarily comfortable with the larger, established public companies rather than the fledgling hopefuls that once inspired a tidal wave of equity money.
Signals also concludes that this trend has legs, meaning a significant flow of equity through 2011 that favors the bigger companies and often leaves small biotechs continuing their constant quest for cash.
- here's the analysis from Signals