Tsunami of biotech IPOs will test investors' appetite for R&D

Biotech IPOs ended 2013 with a growing queue of companies looking to go public, and more than a few cautionary tales about some of the missteps being made in the move into the public sphere. But we'll soon have a better idea of just how much capacity the biotech window will have for new offerings in 2014.

Renaissance Capital counted three biotechs among the mix of IPOs expected to price this week. They run the gamut from Ultragenyx, a 2013 Fierce 15 winner with a pipeline of experimental therapies for rare diseases, to Cara Therapeutics and Dicerna.

The big one in this first wave is Ultragenyx, which will try and raise about $80 million in its IPO while looking for a market value north of $400 million. If it's successful, the IPO could go a long way to validating Ultragenyx CEO Emil Kakkis' vision of building a standalone company with marketing efforts of its own.

Cara Therapeutics, meanwhile, will try and sell 5 million shares at $11 to $13 a share. Then there's Dicerna Pharmaceuticals, which set out to raise around $60 million for its RNAi work, which is still in the preclinical stage. Dicerna, a 2010 Fierce 15 company, raised $60 million from venture backers last summer to fuel its research efforts.

New biotech IPO filings keep coming. Late last week South San Francisco-based Achaogen filed for a $75 million IPO to work on antibacterials. And the gene therapy company uniQure set terms for a $64 million IPO, looking to sell 4.6 million shares at $13 to $15 a share.

Atlas Venture's Bruce Booth recently commented that with about 25 biotechs in the queue and a dozen developers beginning their road shows--a record number--the buyside community is likely going to suffer a bad case of indigestion. And not everyone will make it through the window.

"If the companies have done solid crossover rounds already, or have really compelling assets, the offerings and their pricings should be fine," notes Booth in a column. "But if not, good luck to them as it's likely to be tough."

Last year proved a major boon to the industry, with billions raised after a long and painful IPO drought. We'll start tuning in a clearer picture of the 2014 IPO market over the next few days.

- here's the story from Renaissance

Special Report: 2013 Fierce 15 - Ultragenyx