Biotech trumps IT in venture-backed IPO, M&A

IPOs

Only 12 IPOs made it out last quarter from U.S. venture-backed companies. Of those, 9 were for biotech companies. That’s just one of the measures showing that biotech has held up relatively well despite a volatile stock market, at least as compared to its information technology peers.

That means biotech accounted for three-quarters of the IPOs in the second quarter, which raised a combined total of almost $900 million, according to the latest figures from Thomson Reuters and the National Venture Capital Association (NVCA). That’s better than the first quarter in which 5 out of 6 of the IPOs were for biotech companies, which raised a total of almost $400 million.

Not surprisingly, that IPO pace during the first half was worse than the past few years and isn’t really expected to improve much over the remainder of this year.

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“In the first half of 2016, we're well behind the pace of where we were at this time the prior two years, and if we continue to see more private capital flow into later stage companies in the entrepreneurial ecosystem, it's likely that the IPO slumber may continue in the second half of the year," said NVCA President and CEO Bobby Franklin in a statement.

The $150 million offering from cloud communications platform Twilio ($TWLO) was the largest of the quarter and also a top performer, as it’s already traded up more than 125% on its IPO offer price.

Among biotechs, some of the best IPO returns went to hypertension-focused Reata Pharmaceuticals ($RETA), which gained more than 80% since its offering, and "gene control" biotech Syros Pharmaceuticals ($SYRS), which is up almost 55%.

Faring among the worst in biotech IPOs last quarter were tiny Oncobiologics ($ONS), which is down more than 40% even after slashing its IPO offer price, and Netherlands-based bispecific antibody player Merus ($MRS), which is off about 20%.

On the venture-backed M&A side, biotech led the way when it came to valuations, but not necessarily numbers of deals. Biotech accounted for four deals with almost $6.1 billion. By contrast, information technology had a whopping 46 of the total 64 deals, but they were worth a total of only $1.4 billion.

But almost all of that biotech valuation came from just one deal: the $5.8 billion purchase of Stemcentrx by AbbVie ($ABBV), which was the largest venture-backed deal of the quarter.

- here is the release

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