Initial public offerings (IPOs) for biotechs bounced back from years of dormancy to raise $3.72bn in Q1 2024, but the current global stock market crash means listing failures could lie ahead.
The $3.72bn raised in the first quarter of this year is six times the higher the value reached in Q4 2023, marking the highest quarterly biotech IPO value in over a year on a quarter-on-quarter (QoQ) comparison, based on analysis by GlobalData’s Pharmaceutical Intelligence Centre.
GlobalData is the parent company of Pharmaceutical Technology.
However, financial conditions significantly worsened earlier this week when global stock markets saw large falls amid fears of a US recession. It remains to be seen how the global stock sell-off will impact the biotech IPO rebound soon.
GlobalData business fundamentals senior analyst Ophelia Chan told Pharmaceutical Technology: “The current global stock market crash is likely to create a challenging environment for biotech companies planning IPOs later this year. Lower valuations will probably be necessary to attract investor interest, leading to less capital raised and therefore impacting overall funding strategies.”
“In addition, since the US Federal Reserve has delayed interest rate cuts, this has also heavily impacted investor interest. Given the current volatile market conditions, biotech companies may delay their IPOs in hopes the market stabilises.”
In 2020, biotech IPOs boomed with $30.8bn being raised that year. Uncertainty in the market meant only $5.9bn was raised in 2022, which went further down to $4.4bn a year later.
Chan said: “High interest rates during 2022 and 2023 led investors to prioritise the existing portfolios over new opportunities, causing many biotechs to delay their IPOs until market conditions improved.”
The first and largest biotech IPO to date this year was CG Oncology, which raised $380m for its armed oncolytic virus therapy. Boundless Bio raised $100m in an IPO in March this year while Kyverna Therapeutics, Metagenomi, and Alto Neuroscience have all also made the jump.
There have been six completed IPOs in H1 2024, each raising over $100m, as per disclosed values. This totals nearly $5bn, which is more than double the amount raised by five high-value IPOs in the same period last year.
Chan added: “The growth in completed IPOs in the first half of 2024 marks a positive shift following a period of downturn. This reflects renewed investor optimism to create new opportunities for companies with strong clinical data.”
It hasn’t been all smooth sailing though. Radiopharma specialist Telix raised eyebrows when it pulled a last-minute plug on a $232m IPO. At the time, the Australian company cited “current market conditions” as the reason for U-turning on a proposed Nasdaq listing.
