So much for the dog days of summer. During July, 6 more biotech companies took a running leap through the wide-open IPO window, joining a growing pool of newly made public companies. And some of them, like Agios ($AGIO), were able to launch upsized offerings that swelled the windfall of cash.
Burrill & Co. took a look at the numbers and pointed out that 5 of these companies all went public in a single week--the busiest week for life sciences IPOs in more than 13 years. There are now 29 life sciences companies that have gone public this year--compared to 11 in all of last year--raising $5 billion compared to a paltry $771 million last year. (About half of that was for Pfizer's Zoetis, but as Burrill notes, you can subtract that figure and the bottom line still looks great.) Add the IPO cash to the strong venture numbers posted in the second quarter, and 2013 is shaping up as one of the best years for life sciences fundraising in more than a decade.
Why the sudden shift?
"For a long time, general investors were reticent to invest in the biotech sector because of uncertainties overhanging the industry," says G. Steven Burrill, CEO of Burrill & Company. "Now, driven by the strong performance of the sector as a result of clinical and market successes, investors are embracing biotech or risking underperforming the market."
Their experience is inspiring plenty of others in the industry to follow suit. RJ Kirk's Intrexon wants to go public with a valuation of $1.4 billion--an ambitious figure for a company still gobbling its founder's money. Five Prime and Foundation Medicine also just recently joined the queue.
Of all the new IPOs, Agios had one of the best debuts. After setting a range of $14 to $16 a share, the company sold 5.8 million shares at $18, joining a select crowd of developers able to command a premium.
Still, not every company can make the transition. Iroko Pharmaceuticals opted to cancel its IPO at the end of the money, drawing a few hoots after citing "poor market conditions" for the move. And Europe's biotech industry has largely been left on the sidelines. Prosensa, a Dutch company, had to jump the Atlantic to complete its successful offering.
With every big hit, analysts seem to grow a little more concerned that the market's sudden embrace of biotech could disappear even more quickly than it arrived. The chilly days of 2008 to 2011 froze the industry out of the market. And every hot summer is followed by winter--eventually.
- here's the press release