Tools and technology companies have also been hard hit. As a group, the four companies in this sector that completed IPOs
since 2010 are down an average of 45.3%. The next-generation sequencing companies Complete Genomics (down 66.2%) and Pacific
Biosciences (down 87.7%) were among the worst performing life-sciences companies as both faced difficulties building demand
for their products.
IPOs continue to be scaled back and are coming to market at a modest pace. Overall, the amount of money raised in IPOs through
the first eight months of 2012 is down from a year ago. Through August 2012, a total of 12 life-sciences companies completed
IPOs on US exchanges to raise a total of $871 million. That is a 21.6% drop from the $1.1 billion raised in 13 IPOs during
the same period a year ago. The drop is even sharper globally as life-sciences IPOs around the world raised just $1.8 billion
through the first eight months of 2012 in 25 IPOs. That number represents a 48% drop from the $3.4 billion raised globally
in 35 offerings during this same period a year ago.
Certainly, one thing that has helped improve the performance and outlook for IPOs has been improved stability in the market.
August 2012 represents a stark contrast to August 2011, when the fight over the debt ceiling in the US and the unfolding debt
crisis in Europe sparked a sharp drop in stock prices and fueled a period of volatility.
Medical device maker Globus Medical was the sole life-sciences IPO to be completed in August 2012 on a US exchange. The company
raised $99.6 million by selling 8.3 million shares at $12 each. The offering came in below the company's target range of $16
to $18, but it also represented scaled-back plans for the company, which originally expected to sell 11.8 million shares with
an eye to raising twice the amount it actually did.
The backlog of deals in the queue is growing. There are 20 life-sciences companies in registration as of the end of the end
of August 2012. That compares with just 13 at the same time a year ago. Nine companies have withdrawn their IPOs so far this
year.
The market is more receptive to therapeutics companies right now, as long as those companies are realistic about their values.
However, the five industrial biotech companies in registration face a hard road to going public until the ability to commercialize
these technologies is better established and investors warm to their prospects. At the end of August, Elevance Renewable Sciences
withdrew its planned IPO and announced it had instead raised $104 million series E round with two private equity firms. Elevance
noted market conditions for its decision.
The difficult IPO market will not likely change anytime soon, however, it does remain a viable source of capital for companies
that can show real or near-term revenue, progress, and growth. Companies will need to pick and choose their opportunities.
They will also need to recognize the value of being a public company with the ability to access capital on better terms in
the future in exchange for settling for today's Wall Street valuations.
G. Steven Burrill is chief executive officer at Burrill & Company, San Francisco, CA, 415.591.5400, publications@b-c.com
.
|
