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Life Sciences Public Offerings Alive in 2015

February 05, 2015

Fenwick & West securities co-chair Rob Freedman was featured in a Law360 article about 2015 shaping up to be an even stronger year than 2014 for life sciences companies’ public offerings and eager investors buying in. For example, Fenwick’s most recent venture capital survey found that seven of the eight initial public offerings in January were for life sciences companies.

​Freedman said that with the number of companies coming into the public market, one way to stand out and attract investor interest is to have a record of strong private financings or a solid pharmaceutical company partnership in advance of an initial public offering.

“[Private investors] often raise funds just before or even overlapping the IPO,” Freedman said. “If you can get these private investors interested, you are taking in some cash now, reducing the overall risk, it can be a fairly large sum to move your clinical trials forward.”

“Mezzanine financing is also a bit of a stamp of approval on a company,” he added.

Freedman also credited the Jumpstart Our Business Startups Act of 2012, also known as the Jobs Act, with creating a more inviting and less risky environment for emerging life sciences companies by creating the confidential registration process and making the entire process less expensive.

“The ability to get in line without the world knowing, and then when market conditions look right, being able to jump into your IPO just a few weeks later, that makes it much less of a gamble for companies,“ Freedman said. “The Jobs Act also reduced costs. If you are only raising $50 million in an IPO versus a tech company that might raise a billion, the fact that it costs less reduces another risk of going forward.”

Being able to test-drive their offering with potential investors has enabled companies to crystallize their message and determine if an IPO is the best way for them to proceed, Freedman noted. He pointed to the steady increase in life sciences offerings since 2012 as evidence that the Jobs Act helped smaller companies get a surer foothold in this competitive environment.

The full article is available through the Law360 website​.​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​