After a sluggish start to the year, experts expect an uptick in IPO offerings moving into fall, although it’s unlikely 2023 will fully shrug off its slump.
Pictured: Stock prices shown on computer and mobile screens/iStock
Compared to recent years, 2023 has been a relative desert—or a winter—in terms of biotech IPO offerings. In 2022, for example, 47 IPOs raised a total of about $4 billion, while in 2021, 152 offerings brought more than $25 billion to the market, Reuters reported. So far this year, only 23 IPOs have been filed, according to DealForma, an online platform that tracks deals across the biopharma industry. The 12 that have since been completed have netted $1.6 billion, excluding the record-breaking $41 billion IPO filed by Johnson & Johnson’s Kenvue in May.
“Two years ago, almost anything went public, even things that shouldn’t have,” David Diamond, a managing director overseeing life sciences and technology companies for the business consulting firm CBIZ MHM, told BioSpace. “But this year, it’s basically been dead.”
Such boom-and-bust cycles are not without precedent, and previous disruptions occurred in 1987, 2000 and 2007. During these cycles, the market enters a sort of euphoria, Diamond said, and funders and businesses alike spend lavishly on products that ultimately fall flat. During the height of the COVID-19 pandemic, the market rode a renewed interest in biomedicine and owners took companies public based on preclinical findings, only to run afoul of an economic downturn heading into last year. Since then, aggressive interest rate hikes by the Federal Reserve have made investors wary, with venture capital and early-stage biopharma funding down by 30% and 40%, respectively, compared to 2022.
In this new, cooler phase, Diamond said to expect a return to investors focusing on companies that can back their products with results from Phase II or even Phase III clinical trials. So far, the year’s few IPOs bear this out—Acelyrin, which raised a massive $540 million in an initial public offering in May, was in Phase IIb/III testing at the time, while Sagimet Biosciences released interim Phase IIb data from its lead candidate denifanstat in nonalcoholic steatohepatitis (NASH) at the same time it announced its IPO in June.
But while it has been a slow year, there is evidence that the space is heating up once again, said Chris Dokomajilar, founder and chief executive of DealForma. Roughly half of the companies with active IPOs filed in July and August, and other experts, have similarly pointed to a projected uptick in activity between Labor Day and Thanksgiving, when up to 10 companies may go on offer, according to Endpoint News. Afterward, there will likely be another lull ahead of next year’s JP Morgan Healthcare Conference, held January 8-11 in San Francisco, when many companies make their IPO announcements, Dokomajilar told BioSpace. “There’s hope that things are going to turn, and the rush is really on for 2024,” he said.
Here’s a look at five companies who have filed IPOs so far this year.
* indicates the dollar amount is subject to change
Amount: $311 million
RayzeBio, a targeted radiopharmaceutical company based out of California, RayzeBio announced pricing for its IPO on September 14. In May 2023, it dosed its first patient in a Phase III trial of its lead therapeutic candidate, RYZ101, being developed for the treatment of gastroenteropancreatic neuroendocrine tumors. The drug is also in Phase I testing for small cell lung cancer, and the company said in a press release that it is on track to be the first approved radiopharmaceutical therapy that uses Actinium-225—a cancer-busting radioisotope so rare that the annual global production is less than a grain of sand.
Amount: $250 million
Neumora Therapeutics—a Massachusetts-based drug development company focused on psychiatric disorders—is moving at a steady clip. The company also announced pricing for its IPO on September 14, a little less than two years after launching. Its leading drug candidate, navacaprant, was shown in a Phase II study to reduce symptoms of depression and anhedonia in participants with moderate-to-severe major depressive disorder, and the drug is currently entering Phase III testing. The company expects to release results later in 2024 and submit a New Drug Application in 2025.
3. Adlai Nortye
Amount: $72 million
Although the company filed confidentially for its IPO in December 2022, the announcement became public on July 31 of this year, and the amount was later reduced from $115 million to $72 million. Incorporated in the Cayman Islands and run through subsidiaries in the U.S. and China, Adlai Nortye focuses on treatments for cancer and metabolic diseases. One candidate, AN2025, is currently in Phase III clinical trials for head and neck squamous cell carcinoma, and the company hopes to file for FDA market approval by the end of 2024. In its SEC filing, Adlai Nortye noted that the Japanese chemical conglomerate Nippon Kayaku has agreed to buy $40 million in shares concurrent with the IPO, while an unnamed potential investor has also expressed interest in purchasing up to $50 million in shares.
4. Jyong Biotech
Amount: $40.25 million
Jyong Biotech, a company incorporated in the Cayman Islands but with subsidiaries in Taiwan, Singapore, Hong Kong and China, recently began an IPO rollout in the U.S. A late-stage startup interested in plant-based treatments for urinary system diseases, Jyong Biotech has run its leading candidate, MCS-2, through four Phase III trials as a treatment for benign prostatic hyperplasia (the market for such a treatment is expected to top $11.9 billion by 2031). Despite the obvious need, some investors remain wary, as the company is currently working with an outside statistical team to rework certain data to conform with FDA statistical analysis standards before it can apply for regulatory approval.
5. Metagenomi
Amount: Unknown
Although no official announcement has been made, Endpoints News recently reported that the California-based company, which focuses on treating diseases using gene-editing technology, is currently working with the investment bank JP Morgan on a potential fall IPO listing. Metagenomi has already amassed more than $400 million through venture capital funding and partnerships with biopharma companies such as Moderna and Ionis. However, unlike the other companies on this list, its platforms remain in the preclinical phase.
Amanda Heidt is a freelance science writer and editor based in Moab, Utah. To learn more, follow her on X (@Scatter_Cushion) or visit www.amandaheidt.com.
