Biopharma's flotation haul creeps higher
Life is returning to the IPO scene, but the recovery is slow and uncertain.
Amy Brown & Edwin Elmhirst
6 July, 2023
The biggest quarter for biopharma IPOs since early 2022 raises hopes that a recovery is in motion. But make no mistake, improving public market sentiment will be a slow process, and prone to stalling.
The stats remain stark. Only four small developers listed in the second quarter, the same as in the opening three months of the year. It is the amounts being raised that are ticking higher, though with a fair wind the second half might look even better.
A couple of biggish IPOs joined the queue in June. Apogee Therapeutics, a spinout of the biologics research group Paragon Therapeutics with a focus on immunology, is hoping to raise $100m; Turnstone Biologics is seeking $86m to push forward its tumour infiltrating lymphocytes (TIL) platform. Metabolic disease researcher Sagimet Biosciences, which gave up on a listing in 2021, is trying again, having filed to raise $75m.
Should these developers manage to float the third quarter could take another step up.
The second quarter only saw one IPO of any notable size: that of Acelyrin. The flotation was not merely the second quarter’s biggest deal. The $540m it raised in a massively upsized offering ranks as the third largest biotech IPO, on amount raised, since Moderna listed in 2018.
A focus on immunology, a hot investment area, helped. Investors willing to venture into IPO waters have few options available to them at the moment, and this focusing of capital might be aiding those able to move towards the stock market.
The following chart suggests that executives and their bankers have accepted the realities of these straitened times. It tracks the difference between the initially proposed range and the price at which these new issues floated, and shows that few had to give their valuations a haircut to get away.
A couple of standout success stories are probably helping investors regain confidence in IPOs. Genelux and Structure Therapeutics, two first-quarter new issues, have more than doubled in value since floating. Even Acelyrin has managed to add slightly to the substantial $1.8bn market cap at which it arrived.
Still, wider conditions are far from buoyant. The XBI, a closely followed index of biotech stocks, has recovered from March lows but is only a couple of percentage points up on the year. The Nasdaq Biotechnology Index is down slightly. The situation remains dire in Europe, where no full IPOs have happened since February 2022.
Perhaps scraping along the bottom is the best that can be hoped for in 2023.
Amount raised
Premium/(discount), float price to initial offer
Share price change since float to end Q2
$540m
20%
16%
$10m
-11%
-24%
$8m
0%
-27%
$17m
11%
21%
