Wednesday, August 29, 2007

Is it Getting Breezy in Here?

No, seriously. Did somebody open a window?
Don't get us wrong, we still believe that both venture capitalists and biotech management teams deep down think that M&A is their best exit opportunity. But biotech IPOs seem to be gathering steam, as evidenced by the chart above, created from data we pulled from Windhover's Strategic Transactions Database.

We discuss the phenomenon in a little more depth in the upcoming September START-UP magazine. What caught our eye is the frequency with which we're seeing S-1 filings: just in the past week or so Archemix, Precision Therapeutics, and Biolex have filed to go public. There are a few big boys in the queue too, like Reliant Pharmaceuticals and Talecris Biotherapeutics.

In fact in the past year there have been significantly more IPOs filed than in the previous 12-month period, though quite a few have yet to price their offerings. Those IPOs that have priced in the past year have cumulatively raised 50% more cash from public investors. The averages shown above illustrate where that money is coming from: IPO hauls have been getting better.

Things aren't completely rosey. The pricing environment is still difficult, even for top-tier companies (see Jazz Pharmaceuticals). But we've suggested before that IPO values will increase, thanks at least in part to competition from Big Pharma acquirers and an influx of crossover private/public investors. It seems like that shift is already happening.

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