But is this a bad thing?
Last year saw record numbers of US biotechs going public, with almost 15 billion dollars being raised across over 100 listings. These figures represent a substantial step up from the preceding years. As recently as a decade ago, a year would see only a handful of biotech IPOs.
This momentum has, over the course of the current year, tapered off somewhat. For example, in 2021, a total of 14 biotechs raised upwards of 250 million dollars from their respective public offerings. In 2022, just 1 biotech IPO has garnered the same level of capital; a significant drop off. And, more broadly, far fewer companies in the space have even gone public at all, despite there still being a reasonable queue to do so.
It is hard to say precisely what caused last year’s proliferation of public offerings and what has caused the subsequent slump; it may in fact simply be in line with the general economic trend. It is equally hard to say whether this relative decline will continue unabated. But perhaps the most challenging – and most important – question to answer, is whether it is a bad thing that it has died down.
Several commentators have posited that the surge of offerings in 2021 was in part due to the high volume of pre-clinical companies going public. This can be a very dangerous course of action, given that there is no product – and no data – to indicate how viable these companies will be in the clinical environment. They may yet completely flounder. It is also worth noting that nearly 80% of 2021’s new issues were trading below float price by EOY, and that a third had dropped in price by half – not exactly stellar performance.
All this suggests that it may in fact be a positive that fewer biotechs are entering the NASDAQ. It is not necessarily a global phenomenon, however, and China especially is due some consideration – the BGI-affiliated sequencing business MGI raised the equivalent of over 500 million USD when it went public on the Chinese stock exchange a few months ago. This could be a uniquely North American situation.