Fortunately for the health of the biotech sector, there were more than 10 companies to rank for this year's list of top initial public offerings in the industry. And two of the most recent IPOs in biotech actually went out at the high end of the proposed price range and have traded up since their public debuts. Outstanding. We've summarized the top 10 of the 11 biotech IPOs with highlights on the companies' lead programs and stock performance through yesterday afternoon.
FierceBiotech has ranked the IPOs in this report by the percentage increases from the IPO price to the price of the companies' common stock as of the close of trading on Tuesday, Oct. 23. Clearly, some of these numbers are subject to change and this ranking is only meant to represent the performance of these stocks up until yesterday afternoon. In some cases, the rankings say a lot about how some of the companies have managed their pipelines in the months or weeks since going public.
Don't get attached to the order in which the companies are ranked. Fortunes often change on a dime in biotech, and the smaller the pipeline the more dramatic an impact one huge hit or failure can have on a company. Kythera and Hyperion are two members of the biotech IPO class of 2012 the futures of which depend largely on the fate of single products.
Investors have been burned on past biotech IPOs for companies whose bold experiments never materialized and, looking back, were never likely to succeed. The reluctance of public investors to make wagers on highly risky drug developers makes it even harder for the companies to complete maiden public offerings. And it's quite common to see insiders play key roles in bringing biotech IPOs to fruition.
This year was no exception. Regulus ($RGLS), for instance, relied heavily on pharma partners to support its IPO. Regulus was also one of two drug developers, along with Verastem ($VSTM) to go public with preclinical pipelines and not a single asset in clinical trials at the time of their market debuts. (Verastem announced a deal with Pfizer after its IPO, to in-license a clinical-stage asset.)
Most of the companies, of course, sold their IPOs based in large part on the promise of drugs already in clinical trials and in several cases late-stage development. Tesaro ($TSRO), Kythera ($KYTH), Intercept ($ICPT) and others hit the public market with Phase III programs. And two or more of the companies on this year's list are pursuing big opportunities with drugs against orphan diseases, cancer and diabetes.
After taking a beating in previous years, biotech has been a hot sector on Wall Street this year. The Nasdaq Biotech Index has shot up 30% this year compared with 15% growth in the broader market. And the fact that this year's total number of biotech IPOs already matches that of 2011 indicates that there could be a growing appetite for these types of investments. But there's no indication that we're on the verge of, or will ever, return to the go-go years of the 1990s when biotechs more easily went public at lofty values. -- Ryan McBride (email | Twitter)