The boom in life sciences IPOs on U.S. exchanges, and biotech IPOs in particular, was the biggest story of 2013 for the sector. During the best year for initial public offerings across all sectors since 2000 in the United States, 52 life sciences companies completed initial public offerings to raise a total of $7 billion. That compares to 16 companies that went public in 2012 and raised $1.1 billion.

The surge of IPOs reflected robustness in the public markets, the strong performance established biotech companies, and pent-up demand for good biotech stories. The approval in 2012 of 39 new molecular entities by the U.S. Food and Drug Administration—many of them innovative biologics, cancer, and rare disease drugs— and the agency’s willingness to enable the advancement of promising therapies for unmet needs, bolstered investor enthusiasm for the sector.

The post-IPO return for the 52 life sciences companies that went public in 2013 is 47.6 percent on average as of December 27, 2013. A total of 41 companies, or 78.8 percent, ended the year above their IPO price, and seven of them more than doubled their initial offering price. The 16 companies that went public in 2012 were up 61.8 percent on average at the end of 2013, a sign that bodes well for the continued strong performance of the current year’s newly public companies.

The initial offering price compared to the midpoint of the target price range also improved in 2013 suggesting increased enthusiasm for the sector. The 2013 IPO priced on average at 13.0 percent below their targets. That compared to 23.4 percent below their targets for the life sciences issues that completed IPOs in 2012.

Biotech companies dominated the surge in IPOs in 2013. For this analysis, The Burrill Report counted companies focused on the development of therapeutics, diagnostics, and tools and technology. It excludes the two largest life sciences IPOs of 2013—Zoetis and Quintiles, and the four medical device company and industrial/agricultural IPOs during the year.

The 46 biotech companies that completed initial public offerings in 2013 were up an average of 49 percent at the end of 2013. As a group they raised $3.55 billion, or an average of $91 million per offering, compared to an average capital raise of $65 million by the 11 biotech companies that went public in 2012.

More than 80 percent of the 46 biotechs ended the year above their IPO price, with seven of them up more than 100 percent. These companies are all therapeutics developers: Insys Therapeutics (up 341.6 percent), Aratana Therapeutics (up 219.3 percent), Acceleron Pharma (up 135 percent), Relypsa (up 130.4 percent), Alcobra (up 118.9 percent), Enzymotec (up 116.3 percent), and Epizyme (up 100.4 percent). Five of these top performers priced their IPOs below the target range, with the top two halving the offering price to get their deals done. Two of the IPOs priced at the top of their target range (Epizyme and Acceleron).

As a group the initial offering price compared the midpoint of the target price range improved over 2012, averaging -14.6 percent in 2013 compared to -21.5 percent in 2012. The number of companies pricing within or above the target price range increased to 56.5 percent, from 41.7 percent in 2012 when no company priced above the target range.

For the first time since 2006, a biotech initial public offering priced above its target range. Gene therapy biotech Bluebird Bio went public on June 18 pricing its offering at $17 a share, 13.3 percent above the mid-point of its target range. Shares popped 58.3 percent on the first day of trading and ended the year up 24.6 percent.

The surge in IPOs began in late spring and peaked in the summer as generalist investors, who had shied away from the risks of the sector in recent years, looked to biotech’s strong performance in the overall markets to boost their portfolio returns. Insider buying of the IPO, standard for biotech IPOs, declined in 2013 compared to 2012, according to Renaissance Capital data. Insiders participated in less than half the deals of the 37 deals it counted in 2013, down from 91 percent of deals in 2012. The data also showed that insider participation on average fell to 24 percent of an IPO in 2013, compared to 40 percent in 2012.

The pace of life sciences offerings began to cool at the end of October as investors looking for a quick return left the sector. Six companies slated to go public in November postponed their offerings. Xencor, which initially postponed its deal, revised the terms to slash the offering price and increase the shares offered. It completed an IPO in the beginning of December and ended the year up 65.9 percent.

As valuations for biotech companies returned to normal as the end of the year approached, biotech is set to finish 2013 on a high note, outperforming general market indices with the Burrill Biotech Select Index closing the year up 61.2 percent as of December 27. While the fervor for life sciences IPOs is likely to be less intense in 2014, the mood is optimistic as most observers see the economic growth improving going forward. Of the 21 companies in the IPO queue that have filed publicly, five did so in the final 10 days of the year.