Biotechs have been trying to buck the trend of a bearish market with a series of IPOs in recent months, but as the COVID-19 pandemic takes hold in the West, it looks like that closing window will be slammed shut.
That’s according to IPO firm Renaissance Capital, which reported: “Volatility is at its highest level since the 2008 financial crisis, effectively shutting down the IPO market. Based on previous periods of high volatility, it will take at least one month after the market settles for IPO activity to resume.
“While it’s nearly impossible to price a non-SPAC IPO in this market, many companies have joined the pipeline since the sell-off began. These recent filers are some of the most likely candidates to break the ice when markets recover.”
A number of life science firms make Renaissance’s list of awaiting the “market thaw,” including med tech companies Pulmonx and Inari and biotechs ORIC Pharma and NLS Pharma. Just this week, Keros Pharma, an early- to midstage biotech focused on blood and musculoskeletal disorders, filed for an $86 million IPO.
The company, which was almost forced into the move as its funds drain, will be a real litmus test for this current market.
Duncan Davidson, founding partner with Bullpen Capital, told CNN: “I would be shocked and amazed if any companies go public anytime soon. And the WeWork meltdown showed the problem of 'fake tech' companies. Venture capitalists will need to tell startups to slow their growth and preserve cash in order to survive.”
Frank Lopez, co-head of the global securities and capital markets practice at law firm Paul Hastings, also told the news agency: “Once the volatility subsides, there should be a reset of public and private market valuations.”