Market turbulence around the world hasn't shaken the confidence of Silicon Valley Bank's analysts in the driving force behind a three-year stretch of biotech IPOs. In their recent half-year review, SVB says they're sticking with a prediction of 45 to 55 biotech IPOs for the year as investors continue to hunt down some big returns in a market where safe havens still don't pay very well.
"From a U.S. perspective, I think the fundamentals of the sector are broadly still sound," says Nooman Haque, SVB's London-based director of life sciences healthcare UK.
In the first half of the year SVB counted 24 biotech IPOs, 11 of which had support from the new wave of crossover investors that have been funneling billions of dollars into small drug developers as they prep a move to go public. Size counts for the crossovers, with 5 of the 6 biotech IPOs that earned more than $100 million getting the backing of crossover funds.
There's also a continued leaning toward young, early-stage biotechs. Ten of the 24 were either preclinical (4) or in Phase I (6) when they went public, while only two were in Phase III and one had an FDA approved product. "This activity mirrors what we saw in 2014," notes the H1 analysis.
The U.K. scene, meanwhile, may not have the kind of financial breadth and depth as the U.S. industry has seen, says Haque. But there have been some encouraging signs, with crossovers coming to join a big round for Adaptimmune as it set up its S-1 for Nasdaq.
"Crossovers are not hot-money types," says Haque. They're every bit as sophisticated as the veteran VCs in the field, able to do serious due diligence and pick and choose among the hottest players in fields in the industry, like gene therapy, CRISPR or immuno-oncology.
Companies in the U.K. also have a choice, joining the European migration to the U.S. market or sticking to the London Stock Exchange, which has been seeing several new arrivals after a lengthy absence. (Such as today's news about Acacia.)
The biggest fundamental to recall when markets go on a roller coaster ride, says Haque, is that there are no safe places to invest these days.
"Safe assets don't really yield anything anymore," says the analysts. "It's safe, but I gave you back less than what you gave me. There are good reasons for investors to seek out risk."
Haque will be joining FierceBiotech on October 12 for a chat about biotech and the public markets. You can check out the half-day conference and register for it here. -- John Carroll, Editor-in-Chief, life sciences. Email me at [email protected]