Last month’s article on private equity therapeutics financing trends showed how biotech start-ups struggle to raise private equity investment this year, following the pandemic-driven life sciences boom. In this article, we will take a closer look at how recent challenges are reflected in the IPO market and outline public financing trends.
In the wake of this year’s geopolitical developments, biopharma companies and investors are encountering challenging public market conditions. After a record year in 2021, the life sciences venture capital market is facing macroeconomic pressures, leaving companies hesitant to go public: As the monthly Venture Valuation life sciences reports show, there was not a single IPO on record in June and only one offering in July 2022. Following rapid growth last year, inflation and rising interest rates due to the beginning of the war in Ukraine sent share prices plummeting. The increased volatility on the stock market also caused valuations to shrink. Combined with poor post-IPO share price performance, this led to a sharp decline in offerings and the postponement of many IPOs (see Figure 1), not only in life sciences but across many sectors.
According to Biotechgate data, only 50 life sciences companies have been listed on the stock exchange so far this year (of which 27 were listed in the US and 9 in Europe), compared to 310 In the same period last year (200 in the US, 64 in Europe). Similarly, there have only been around 144 Post-IPO rounds so far this year, compared to 595 companies with public offerings following their debut as a public company in the same period in 2021. For more details, see our article on the largest life science IPOs in 2022.
Oncology still on top
Not only in the private equity sphere, but also in the public market, oncology is the most popular therapeutic area: In 2021, companies with oncology drug candidates went public the most (63 IPOs), followed by 31 IPOs of companies developing drugs in the field of neurology.
Figure 2 shows the financing values of IPOs in the global biotech and pharma industry in 2021 and 2022 by the top 5 therapeutic areas. In total, oncology accounts for the largest offering amount during this period, followed by infectiology / parasitology, neurology, immunology, and gastroenterology.
Looking at various types of biopharma financing deals in 2022, such as private equity deals vs. IPOs and Post-IPOs, the picture is similar (see Figure 3): Oncology is the therapeutic area that has received the highest amount of cash in each month of 2022 so far.