Just in case you may have missed the news, biotech IPOs are hot. And the National Venture Capital Association (NVCA) in league with Thomson Reuters has provided some data to back up the trend, noting that the second quarter of this year offered the largest number of biotech IPOs since the third quarter of 2000.
Conversely, M&A deals were off in the quarter. But deal numbers and dollars often fluctuate dramatically from quarter to quarter. And right now an IPO is starting to look more attractive than a buyout when it comes to staging an exit for venture backers. Clearly, after years of being left out in the cold on Wall Street, investors have regained their appetite for the most promising biotechs. High-flying stocks like bluebird bio ($BLUE) and Chimerix ($CMRX) have finally ginned some excitement at the prospects of a money-losing drug development outfit.
The NVCA counted 21 venture-backed IPOs in the second quarter that carried a collective value of $2.2 billion. There were only 7 in 2008 and 11 in 2009 as investors hunkered down in the wake of the financial crisis. Last year that figure rose to 46, compared to 29 for the year to date.
Now that biotech IPOs are back, analysts have begun trying to gauge how long the good times will last. And it's clear that many biotechs--and their venture backers--don't want to test the limits of investors' appetite. At least 7 more biotech IPOs have been filed with the SEC and more are sure to follow.
"We have been predicting an IPO pickup in the second half of 2013 and it appears as if this momentum has begun, driven by the strong biotechnology offerings," said Mark Heesen, president of the NVCA. "We are hopeful that this positive trend will not be impacted by negative externalities in the second half of the year, as has been the case over the last several years. While on the surface, the low acquisitions volume thus far in 2013 could appear problematic, our market intelligence is telling us that there is a great deal of inbound interest for venture-backed targets, suggesting that these companies are holding out for better pricing from strategic buyers. With an improving IPO market, this situation will only improve for our companies."
- here's the release