A handful of IPO announcements has spurred some real enthusiasm in the biotech field, but an important bellwether of financial activity indicates we're a long way from recovery. A separate report out today concludes that the overall M&A market is being driven by companies in desperate need of a deal.
There were a total of three venture-backed IPOs in the third quarter, according to the Exit Poll report by Thomson Reuters and the National Venture Capital Association. And the poll listed no venture-backed M&A activity in biotechnology.
"The fact that many in the media are classifying three IPO's as resurgence is evidence of how low our expectations have become," said Mark Heesen, president of the NVCA. "While we are encouraged by the success of the companies that have gone public, their performance has yet to translate into a filling of the pipeline. Companies simply are not registering to go public yet. On the acquisitions side, both volume and average disclosed value declined in the third quarter which is not the direction we hoped to see. While the psychology of the market is trending positive, our original forecast of a true recovery not beginning until 2010 still unfortunately holds true."
VentureSource, meanwhile, is reporting that the value of acquisitions by venture-backed companies in the U.S. plunged from $2.8 billion in the second quarter to $2.3 billion in the third. "The mindset in [the first half of the year] was that there is a lot of underpriced value in the market and M&A departments spent a lot of time combing through that," said Dave Fachetti, a managing director at Globespan Capital Partners.
In the life sciences sector, Cumberland Pharmaceuticals, a specialty pharmaceutical company based in Nashville, TN, raised $85 million via an initial public offering on Nasdaq. The figures do not include the Talecris IPO.