IPOs Dropped 54 Percent in the First Quarter, As VC Investment Stays on the Sidelines
April 6, 2015
By Riley McDermid, BioSpace.com Breaking News Sr. Editor
New data from the Exit Poll report by Thomson Reuters and the National Venture Capital Association shows that initial public offerings dropped 54 percent during the first quarter of 2015, with a 58 percent decrease in dollars invested in the 17 offerings, 13 of which were life sciences IPOs.
Overall, the 17 venture-backed IPOs raised $1.4 billion during the first quarter of 2015, with life sciences IPOs representing 76 percent of total listings in the first quarter.
“This quarter marked the first quarter to see less than 20 venture-backed IPOs since the first quarter of 2013,” said the report.
“For the first quarter of 2015, 86 venture-backed M&A deals were reported, 16 of which had an aggregate deal value of $2.1 billion. Venture-backed M&A activity during the quarter fell to its lowest levels, by number of deals and disclosed value, since the first quarter of 2013.”
It’s been a rocky ride on the capital markets as well, with the some exchange-traded funds, like iShares Nasdaq Biotechnology Index Fund losing as much as 2.23 percent during the past week alone. Those loses have trimmed a nearly three-fold gain in the NBI since 2012, and may be indicative of investor caution as venture capitalists sit on the sidelines and wait for volatility to die down.
“With such a blistering pace for venture-backed exit activity in 2014, it was only a matter of time before we saw a drop activity. Despite the decline in venture-backed IPOs for the quarter, a lot of promising young companies made their debut on the public markets with many more waiting in the wings,” said Bobby Franklin, president and chief executive of NVCA.
There were also a few notable pull-outs from companies that decided to wait until the market was at a higher point, a common tactic used by corporate boards to make sure their IPO gets the maximum amount of value possible. Among those were Koltan Pharmaceuticals and Israeli company PolyPid Ltd. , which in a terse statement the Petach Tikva, Israel-based firm said it would withdraw its plans for the $20 million IPO, which had been priced at a range of $10 to $12 a share.
There had been rumors that a recent selloff in the biotech sector, which has dropped 7 percent the last week in march, and thus would have value the company at a lower amount, pushed PolyPid to pull its IPO. But Asaf Bar, chief business officer, told the Wall Street Journal other factors were in play.
“We were very confident with our ability to go public even with the market conditions,” he said. Bar added the company will wait for its pipeline milestones in the second half of 2015 before attempting another IPO.
Cheerleaders for the industry also remained sanguine about the near halving of the offerings on tap last quarter, saying that with investment happening at such a rapid and unprecedented clip in 2015, some pullback was inevitable—though likely not permanent.
“With 54 venture-backed companies having already filed publicly for IPOs and many more confidential registrations already in place, we are optimistic that the pace for venture-backed exits will pick up steam as the year moves ahead, creating opportunities for everyday investors to be shareholders of innovation,” said Franklin.
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