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Biopharma IPOs occurred in the US in record numbers but delivered mostly negative returns(Source:Alamy)

More biopharmaceutical companies have gone public in the US during 2021 than in 2020, breaking the record set last year with a quarter left to go, but the momentum may slow in the fourth quarter now that returns generated by this year’s crop of newly public firms has turned negative. The 88 companies that went public through the third quarter of this year delivered a 4% loss, on average as of 4 October.

Returns have been falling all year, with the 32 companies that went public in the first quarter delivering an 11% average return as of 1 April, while the average return fell to just 1.1% by 1 July for the 62 companies that priced IPOs through the end of Q2. (IPO Update Booming Biopharma On Pace For Another Record Year) Biopharma companies fared better in 2020 when the 58 companies that went public during the first three quarters delivered a 49.4% average return as of 5 October of last year. (IPO Update 58 Drug Developers Raised 125bn Through Q3) In total, there were 86 IPOs in 2020 with an average return of 86% as of 27 January of this year. (IPO Year In Review RecordYear Bodes Well For 2021 And For More SPACs)

How Does Biopharma Compare?

Nasdaq Biotechnology Index (NBI) performance this year has significantly underperformed compared with the broader Nasdaq and the S&P 500. Year-to-date increases as of 4 October are:

  • 2.9% for the NBI

  • 10.6% for Nasdaq

  • 14.5% for the S&P 500

In 2020, the Nasdaq Biotechnology Index (NBI) dropped 17% in mid-March from where it started the year as global financial markets sank due to the initial uncertainty that came with businesses shutting down or moving employees to remote work due to the pandemic. But the NBI gained upward momentum upon the realization that the biopharma industry’s vaccines and therapeutics eventually would enable reopening of global markets – the index ended the year up 28.1% from where it started. Drug developer IPO numbers increased from nine in the first quarter to 20 in Q2 and 29 in Q3 with 28 more in Q4.

Investors’ positive sentiment continued to drive the NBI higher in early 2021, with the index up 44.3% from the start of 2020 as of early February of this year. Valuations waned somewhat, but the NBI stayed above 2020 levels and it got another jolt in early June when Biogen, Inc. and Eisai Co., Ltd. won US Food and Drug Administration approval for the Alzheimer’s therapy Aduhelm (aducanumab). (Aduhelm Approval Boosts Other Alzheimers Drug Developers)

The NBI was up 46.7% in early August versus the start of 2020 but has given back some of the gains since then, closing up 31.8% from the start of last year. The biotech index is up only 2.9% from the start of 2021 while other stock indices have increased by double digits so far this year, despite recent declines.

Consequently, while the number of IPOs increased from quarter to quarter through Q3 of last year, the number of first-time offerings has fallen this year from 32 in the first quarter to 30 in Q2 and 26 in Q3. The drop-off may be a function of the typical business slowdown seen during summer months but also may be a result of the volatile nature of biopharma stock valuations this year. (See table at the end of this article for 2021 IPO performance data for individual companies.)


Nevertheless, drug developers have raised remarkable sums in this year’s IPOs to date relative to 2020 offerings. There were no IPOs above $500m last year, two in the $400m-$499m range and two in the $300m-$399m range through the third quarter. This year has seen one topping $600m (Sana Biotechnology, Inc.’s $675.6m offering), one in the $500m-$599m range ($501.8m for Recursion Pharmaceuticals, Inc.) and one in the $400m-$499m range ($425m for Lyell Immunopharma Inc.) with seven bringing in $300m-$399m. (Finance Watch Ten IPOs In Three Days Raise 19bn)

However, with $160m raised on average by biopharma companies during the first three quarters of 2021, this year’s per-company average still falls below the first three quarters of 2020 in which the average gross was $215.5m, or $184.2m when excluding Royalty Pharma plc’s $2bn outlier IPO.

Last year had a greater number of IPOs in the $200m-$299m range – 22 offerings or 37.9% of the companies that went public through the third quarter of 2020. There have been 19 IPOs in the $200m-$299m range in 2021, which is just 21.5% of this year’s first-time offerings, so far. The third quarter ended on a high note with artificial intelligence-enabled drug developer Exscientia Ltd. raising $304.7m in its 30 September offering and closing up 23.2% in its first day of trading on 1 October. (Finance Watch Exscientia Launches Last IPO Of Q3 Brings US Total To 88)

Including and excluding the Royalty Pharma IPO, the number of biopharma offerings this year tops the full-year 2020 total, but the amount raised does not, yet – $14.1bn raised by 88 companies through Q3 of 2021 versus $17bn raised in all of last year’s 86 IPOs. (Finance Watch 2021 Now Has More IPOs Than 2020 But With 32bn Less)

Three drug developers and one company with proteomics tools that enable drug discovery and development are expected to go public in the US during the week of 4-8 October, according to the IPO-tracking firm Renaissance Capital:

  • Barely more than six months after Cambridge, MA-based Pyxis Oncology closed a $152m series B round of venture capital funding, the company plans to raise up to $133.4m before any shares sold to meet overallotments from an offering of 8.34 million shares at $14 to $16 each.

  • Kinase inhibitor developer Theseus Pharmaceuticals, Inc., also in Cambridge, MA, came out of stealth mode with $100m in series B financing in April and now plans to raise up to $133.3m, before overallotments, from the sale of 8.3 million shares at $14 to $16 each. SC144264

  • Purchase, NY-based Cognition Therapeutics, Inc., which disclosed a five-year grant totaling up to $78.5m last year to fund its Alzheimer’s drug development program, could gross up to $43.6m – before overallotments – from the sale of 3.35 million shares at $11 to $13 each. (Finance Watch New Funding Available For Antibacterials StartUps)

  • The proteomics firm IsoPlexis Corp. in Branford, CT has proposed the sale of 8.3 million shares at $14 to $16 each, which would gross up to $133.3m before overallotments.

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