Biotech IPOs bounced back in first quarter, but backlog remains

Initial public offerings by biotechnology companies reached pre-pandemic levels during the first quarter, with nine drugmakers collectively raising more than $1.3 billion, according to BioPharma Dive data.

The sum is more than three times the $375 million in total proceeds from biotech IPOs in the first quarter last year, and roughly matches the first quarter total in 2020.

Six of the nine biotechs to price IPOs between January and March raised $100 million or more. The largest two offerings, from CG Oncology and Kyverna Therapeutics, raising $380 million and $319 million respectively.

While the activity has come in spurts, it’s a positive sign for a sector attempting to rebound from a market downturn last year. There are other green shoots, too: Venture capital companies put nearly $7 billion into private startups during the first three months of 2024, more than in any quarter last year.

But investment in IPOs is still at a fraction of the $4.6 billion in proceeds recorded in the first quarter of 2021, when a record 31 companies went public.

“Clearly, the market cannot sustain 70 to 80 IPOs a year,” said Andrew Lam, managing director and head of biotech private equity at Ally Bridge Group. “It’s a reversion back to quality. Even though IPOs are yet another financing round, it has been historically relegated to the cream of the crop.”

The public market entry of preclinical companies such as Metagenomi, which raised $94 million in its February offering, shows the right early-stage biotech can still have success, said Jordan Saxe, senior managing director at Nasdaq.

As of Thursday, Nasdaq had 25 applications from life sciences companies to list on the exchange, including a number that had indicated IPOs plans in prior years but didn’t get out. Though the path to Wall Street isn’t the straight line it was in 2021, the activity to date this year has bolstered confidence, Saxe said.

“That’s fine as long as they’re still on the path to tap the public markets, it shows us that there’s health in the private space,” Saxe said.

More mature companies helmed by veteran drug developers are still raising the most cash, however. And, of the nine companies to price IPOs this year, only CG Oncology, Kyverna Therapeutics and Telomir Pharmaceuticals are trading above their offer price.

Most of the activity came earlier in the first quarter, too, with only one new listing from Contineum Therapeutics so far in April.

May through July could be busier as companies line up investors for their new public offerings. Funding for both public and private biotech companies has risen, buoyed by “anticipated rate cuts, continued M&A, and strong fundamentals,” Jefferies analysts wrote.

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