The 16th Annual BIO CEO & Investor Conference concluded with a lively Closing Plenary Session examining the current capital market for IPOs, where the industry has been and where it’s headed in 2014. The panel unanimously agreed: 2013 was the year of the IPO. In total, 56 healthcare companies priced an IPO; 43 of these were biotech companies. Last year was the strongest IPO year since 2000 and the second strongest in history with over $10 billion in capital raised. By the end of January 2014, 82 percent of these IPOs were trading up.
According to Dennis Purcell, senior managing partner of Aisling Capital, the success of the 2013 market can be attributed to a convergence of things, including: the return of the generalists, increased venture capitalists interest, sales that were exceeding the launches and well-funded companies. Ed Mathers, partner of New Enterprise Associates, believes that the 2012 JOBS Act helped companies test the waters which had a significant impact on their eventual success. Additionally, Mathers thinks investors’ interest is now back.
When the discussion turned to big pharma, David-Alexandre Gros, MD, executive vice president and chief strategy officer of Sanofi, shed some light on his company’s strategy. When Sanofi is looking to invest in a start-up, the quality of the science and phases of development are key factors. Gros admitted that Sanofi is finding it harder to do transactions as companies no longer need the cash. In his opinion, big pharma needs to either invest earlier or create new companies.
Big pharma trends continued to be the topic of conversation. Mathers opined that, universally, most big pharmas concentrate less on research and more on development. Purcell believes there is a significant change in the importance of the corporate VC. They are no longer seen as second class citizens and now have a seat at the table with 35-40 percent of all deals including corporate VCs.
The discussion quickly turned back to 2013’s success. Michael Margolis, R.Ph., managing director of ROTH Capital Partners, feels as if, moving forward, the market will be selective. Those IPOs with good quality and good science will resonate well with investors. When predicting what will do well in the future, Margolis pointed to immuno-oncology (thanks to ASCO) and orphan drugs. Furthermore, he believes the industry is in a better place than it was 3-5 years ago due, in large part, to a responsive FDA, the end of a R&D draught, capital markets coming alive and increasing interest in the orphan drug space.
In large part, the panel’s sentiment was similar to the overall conference: optimism and excitement for the year ahead.