Over the past 7 months, 38 biotechnology companies have filed for IPOs, and with several more biotech companies filing IPOs in early August, the total 2018 number is closer to 48. In contrast, 21 biotech companies filed for IPOs during the first 7 months of 2017, indicating an 81% increase in IPOs from biotech companies this year.

According to experts, biotech company activities have grown more rapidly than the general IPO market in 2018, representing approximately 33% of all IPOs. This is due to the current market that is friendly to IPOs, which affords biotech companies the opportunity to establish complete platforms for drug development. In a closed, less hospitable market, biotech companies do not have time to grow their valuations, instead usually developing one product and being acquired by big pharma companies. In these cases, the biotech companies’ valuations and private investors’ returns both tend to be lower. Because of this, biotech companies are moving fast to capitalize on the open IPO market before any changes due to factors such as politics and US FDA policies that may affect the approval process of drugs.

While investors in biotech companies are also interested in benefitting from the IPO-heavy market, the issue lies in deciding which biotech companies to invest in. Generally, it is suggested to focus on companies that can provide clinical study results, which not all biotech companies have, as that will those that provide information on how close the company is to getting their investigational drug application being approved.

Source: Investor’s Business Daily