UPDATED: Fresh burst of biotech IPO pitches launches a busy Q4 season
After a slight lull in the biotech IPO arena over the summer, new S-1s came piling in at the beginning of the fourth quarter as another round of hopefuls plunged into the market, hoping to imitate some of the stellar debuts that have greeted many drug developers this year.
Back in September Foundation Medicine ($FMI) priced over the range and immediately soared more than 80%. And Ophthotech ($OPHT) also crested its range, easing any lingering doubts--for now, anyway--about the short-term sustainability of the biotech IPO frenzy. Together they raised $273 million in a 24-hour pop.
In early August Intrexon ($XON) stepped up to shake hands with Wall Street, walking away with $160 million and a market value north of $2 billion--most of which is controlled by biotech billionaire Randal "RJ" Kirk--after its stock price soared on the debut. A spate of mostly underperforming IPOs followed, notably highlighted by a lackluster debut from Regado Biosciences ($RGDO)--which was subsequently rewarded with a sharp spike in its share price.
Regado wasn't alone. Going back over the performance of some of these slow starters revealed that many saw a fresh burst in the share price as analysts began to cover the companies. Companies like Cancer Genetics--initially far off its initial mark--followed up with new offerings to raise millions more.
A total of 39 biotechs have gone public so far this year, raising close to $3 billion. (I don't include Zoetis, an animal health company spun out of Pfizer which often makes the life sciences lists.) This is far and away the best IPO year for the industry since 2000 and a major improvement over 2012, as biotech offerings were beginning to make a comeback.
The batch of newly public companies includes Agios ($AGIO), which broke through the ceiling on its range despite the fact that it has no clinical data yet on any of its drug candidates. OncoMed ($OMED) and Onconova ($ONTX) also managed the same range-busting feat, though offerings from small outfits like Heat Biologics only managed the low end of the range.
Getting a fresh source of capital and $3 billion-plus windfall to pump into clinical trials is a positive development for biotech. But in just a few short months, the market has moved from a deep chill to tropical heat. We know from past booms that once the frenzy begins, funds start chasing big returns and throw fundamentals out the window. With Intrexon, the biotech IPO boom began to look increasingly overheated.
No one, though, has any solid idea how long this streak will last.
The focus now shifts to the 15 biotechs angling for a big IPO of their own.
I've updated the biotech IPO list below as of October 21. As always, let me know if I missed anything. For more analysis on the IPO scene in the first half of 2013, check out our original report. -- John Carroll, Editor-in-Chief. Follow me on Twitter and LinkedIn.