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Eight biotech companies priced initial public offerings on U.S. exchanges in the closing week of July, collectively raising $1.3 billion. But only two of them priced above the midpoint of their target price and only one ended the week above the IPO price. The IPOs occurred during one of the most active weeks in the IPO market with 16 deals priced. It was the largest number biotech IPOs in one week since the eight IPOs completed during the first week of February and the largest number since the second week of February in 2000. But July has been brutal on valuations and post-IPO interest in these offerings has remained weak. Most companies waited until the final two weeks of the month and slashed their prices to go public, while a handful postponed their offerings.
The last week of July was no different. Of the eight companies that completed initial public offerings on U.S. exchanges, only Avalanche Biotechnologies priced above its original target range and performed well post-IPO. The early-stage developer of gene therapies for eye diseases raised $102 million through an upsized offering of $6 million shares at $17 a share, 21 percent above the midpoint of its original target range of $13 to $15 a share. The biotech ended the week up 48 percent.
On the other end of the scale, Israel-based Macrocure had to slash its price 29 percent to raise $54 million through the sale of 5.4 million shares at $10 a share. The developer of cell therapies for hard-to-treat wounds ended the week 25 percent below its IPO price.
In between, six other drug developers completed offerings ranging from Catalent’s $871 million IPO to Bio Blast Pharma’s $35 million offering. As a group, the eight drug developers ended the week down 32.8 percent.
Despite the poor performance of the past weeks offerings, 2014 is shaping up to be the best year ever in the United States in terms of the number of life sciences IPOs. The JOBS Act and strong capital markets have eased the path for going public. So far this year, 74 life sciences companies have raised $5.7 billion through IPOs on U.S. exchanges, topping the 52 life sciences IPOs in 2013, and 66 biotech IPOs in 2000. At the end of July they were 1.6 percent above their IPO price on average. Biotech companies—therapeutics, diagnostics, and tools/technology companies—accounted for 63 of the IPOs and were up 2.5 percent on average.
The 18 life sciences companies that went public in July raised $1.8 billion, topping the $1 billion raised by 16 life sciences companies in February and making the month the biggest for IPOs in terms of the number of completed deals since February 2000.
While the general downturn in the capital markets has affected the biotech sector, its momentum has slowed mainly due to worry over the impact of a pushback on rising drug prices and concern that the sector is overvalued. There are still plenty of companies waiting to complete announced IPOs and the traditional supporters of life sciences IPOs remain committed to new issues of innovative companies, but at valuations that reflect the current realities of the market.
August 01, 2014
http://www.burrillreport.com/article-biotech_ipos_keep_on_coming_.html
