Is Biotech Back? IPO and M&A Activity Points to Resurgence
Biotechnology struggled in the public equity markets in 2023, hit by a combination of depressed investor sentiment, regulatory challenges, geopolitical tensions, and supply chain disruptions. During the year there were fewer than 50 initial public offerings (IPOs), and a significant drop in follow-on offerings, and debt financing. During 2023, funding decreased by 43.2% compared to 2022 and by 52.3% compared to 2021.
After a strong start to 2024, biotech investors are optimistic about the possibility of continued growth and innovation this year and beyond. PRISM MarketView has also seen strength in the sector this year. The PRISM MarketView Emerging Biotech Index is valued at $181.30, up +81.3% since its inception.
IPO Season
Twelve biotech companies have successfully completed IPOs in 2024, raising a total of $22 billion from optimistic investors. Five companies launched in January, raising $7 billion, $9 billion was generated in February, $4 billion in March and $2 billion in April. The largest IPO for the year was launched by CG Oncology (CGON), raising an impressive $380 million for the development of its late-stage product cretostimogene grenadenorepvec, an oncolytic adenovirus designed to preferentially replicate in and kill cancer cells. CG is evaluating the treatment in Phase 3 trials in patients with non-muscle invasive bladder cancer. CG has a market cap of $2.09 billion, and its share price is currently $31.43.
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The year’s smallest IPO was celebrated by Telomir Pharmaceuticals (TELO), raising $7 million for the development of Telomir-1, a small molecule drug that aims to prolong cell division and slow aging. Telomir’s market cap is $155.45 million, and its share price is sitting at $5.25.
The most recent IPO was an upsized offering by Rapport Therapeutics (RAPP), which is developing treatments for central nervous system disorders, including focal onset epilepsy, pain, bipolar disorder, and hearing disorders The company raised $154 million at a valuation of more than $601.4 million. A total of 19 biotech companies went public in 2023. The increased number of filings in 2024 signals an uptick in public offerings and positive investor sentiment about continued strong performance in the sector.
M&A Activity
According to a new report by Leerink Partners, the number of biopharma M&A deals more than doubled in the first quarter of 2024 compared to the same period in 2023. A total of 13 acquisitions were successfully completed in Q1, including Novo Nordisk’s (NVO) Novo Holdings’ $16.5 billion acquisition of Single Use Support, a contract development and manufacturing organization providing advanced technology solutions for the pharmaceutical production process. The second largest deal during the quarter was Gilead’s (GILD) $4.43 billion acquisition of CymaBay Therapeutics, a company developing therapeutics targeting the underlying causes of liver, metabolic and other inflammatory diseases.
A report by Morgan Lewis suggested that biotech M&A activity will resemble prior years with a total deal value in the $225 billion to $275 billion range across all subsectors of the life sciences industry. “We continue to expect that deals in the $5 billion to $15 billion range will be the market sweet spot but see the potential for one or more deals in the $20 billion to $40 billion range before year-end,” stated Partner, Laurie Burlingame, the report’s author. Finally, Fierce Biotech noted that Q1 was also a record quarter for public companies, with 54 registered offerings and 17 PIPEs raking in a combined $17 billion in proceeds.
