Public market investors have offered a warm welcome to life sciences companies so far in 2021. As Fenwick’s recent H1 2021 Going Public Report shows, the pace has picked up as 2021 progresses, with 31 life sciences IPOs in the first quarter and 35 in the second.
Aggregate deal size was also on the uptick for life sciences compared to the second half of 2020. In the first half of 2021, more than 83% of life sciences IPOs raised $100 million or more, compared to approximately 77% of deals raising $100 million or more in the second half of 2020.
Among the 66 life sciences offerings, 94% of companies priced within their original IPO range, which was the same percentage as in the second half of last year, and is indicative of a continued strong market environment. But a few newly public life sciences companies have seen their stock prices fluctuate, and prices may continue to be volatile.
Special purpose acquisition companies (SPACs) remained a popular way to reach the markets. There were 16 life sciences de-SPAC mergers in the first half of 2021, compared to four in the second half of 2020.
The most notable biotech IPOs in the first half of the year were for cell and gene therapy companies. According to BioPharma Dive, in 2020, 13 genetic medicine companies went public, which was nearly the total for the previous two years combined. Despite recent regulatory and clincial setbacks, another 13 have already gone public in the first half of 2021, making this another strong year for genetic medicines, particuarly gene editing technologies.
Notably, the cell engineering and therapy companies with the largest IPOs from H1 have yet to send drug candidates to the clinic. Their IPO price tags reflect investor enthusiasm for the sector, even for companies yet to produce any clinical safety and efficacy data.
The SPAC Outlook
Last year brought a boom in SPACs, viewed by many as a less complicated road to the public markets. However, just a handful of de-SPAC mergers in the second half of 2020 were in the healthcare space. As the boom continues unabated this year, more life sciences companies are going public this way, totaling 16 in the first half of 2021.
It will be interesting to see if the remainder of 2021 will match the same impressive figures when it comes to life sciences companies reaching the public markets. So far, despite some market tightening and correction in Q2, the second half is off to a promising start.
With life sciences companies finding their way to the public markets before they’ve even begun clinical trials, it seems like a safe bet to say 2021 will be a record breaker for the sector when it comes to IPOs.