Biotechs See Boom And Bust
After three hot years, the market for biotech company stocks cooled this past summer. As a result, the wave of initial public offerings (IPOs) that began early in the year quickly ebbed by late fall.
In general, the global IPO market slowed dramatically in the third quarter because of market volatility stemming from economic growth concerns in China and uncertainty surrounding an interest rate hike in the U.S., according to the IPO research firm Renaissance Capital.
For biotech stocks in particular, concerns about possible price controls on high-priced biologics and other drugs further dampened investor interest in late September.
Companies that launched IPOs in the first half of 2015 easily raised cash, some quite a lot. As the half advanced, the gene therapy firm Spark Therapeutics secured $185 million, T-cell-targeted Adaptimmune brought in $176 million, and Alzheimer’s disease-focused Axovant Sciences raised $362 million.
Some firms IPO’d successfully in the second half as well. ProNAi Therapeutics, which held a $138 million IPO in July, and Global Blood Therapeutics and Aimmune Therapeutics, with August offerings of $120 million and $160 million, respectively, went on to rank among the best performers of any newly traded U.S. stock.
NantKwest offers a more cautionary tale. The immunotherapy firm held a $223 million IPO in July. On its first day of trading, the company’s stock jumped from $25.00 per share to near $40, giving it an unprecedented market value of $2.6 billion.
But by late September, NantKwest’s share price plummeted to about $11, which ranked it among the worst U.S. performers relative to its offering price in any industry sector, according to Renaissance Capital. In mid-November, after reporting a $160 million loss, NantKwest announced a $50 million stock buyback to bolster its stock price.
After September, the window for IPOs remained somewhat open, but several companies—including CytomX Therapeutics, Dimension Therapeutics, Mirna Therapeutics, Voyager Therapeutics, and Wave Life Sciences—held IPOs at prices much lower than initially planned. Meanwhile, Acacia Pharma, GenSight Biologics, and Shield Therapeutics were among those that decided to postpone their plans to go public.
By year-end, the numbers for 2015 biotech IPOs are expected to be below those seen in the record year of 2014, when nearly 90 offerings raised $6.3 billion, according to the market research firm EvaluatePharma.