If you’re not yet involved in the biotech sector or aren’t seriously considering investing in it, what’s keeping you?
Just a few years ago, analysts were issuing warning sounds about investing in biotech, citing high risk, long intervals between investments and ROIs. Fast forward to 2013.
As this Forbes piece reveals, twenty-seven biotech firms have had IPOs since January of this year alone. And just consider the range of companies: Cellular Dynamics (NASDAQ: ICEL) is a stem-cell company; Intrexon (NYSE: XON) is a synthetic biology firm; Bluebird Bio (NASDAQ: BLUE) is a gene therapy company.
Forget making exotic drugs and awaiting FDA approval—biotech is heating up. Here’s how you get into it while the gains are hot.
Fierce Biotech reports that just recently, Bind Therapeutics filed its plans for an IPO seeking to raise $80 million. The company’s most promising offering is BIND-014, a mid-stage cancer drug that’s in trials. We won’t see the data until later in 2014.
Bind’s hoping to use its nanotech skills to deliver—with high precision—a boosted dose of docetaxel directly to cancer cells and blood vessels that feed tumors. It’s got a star roster of collaborators already—Amgen (NASDAQ: AMGN) with a $180 million deal, Pfizer (NYSE: PFE), and AstraZeneca (NYSE: AZN).
Thus far, Bind has already run through $82 million after having previously raised $95 million to fund its development.
Exciting Times for Biotech
Those are big numbers. After 2008, a lot of investors became leery of close contact with biotech investing. Now, with nearly 30 IPOs since January and more than $1.5 billion raised in capital, it looks like investors are back in full force. Several of these companies ended up selling above their expected ranges and continued rising since then.
Intrexon, which I mentioned earlier, is another success story. Intrexon was taken public by Randall Kirk, who in 2011 or so sold New River Pharmaceuticals and Clinical Data for about two billion dollars.
Even back then, Kirk was reputedly excited about Intrexon. When Intrexon went public last Thursday for $16 a share, things went nuts quickly. By the end of day, Intrexon was at $24.73 a share—that’s a rise of 54.5 percent in a single day.
By midday on Friday, shares were up to $26.86, and Intrexon is now worth over $2.5 billion. The company focuses on synthetic biology—the reengineering of living cells. According to Kirk (in this Forbes report), Intrexon could see applications for its technology and research across food, health, energy, and environmental sectors.
It doesn’t even matter that Intrexon, in 2012, showed a net loss of $103 million on $14 million in revenues. The market is just too caught up, enamored of the potential these exciting biotech firms promise.
Later this year, in October, the Biotechnology Industry Organization will host the 12th Annual BIO Investor Forum—a biotech investor conference that will work through investment strategies for both early-stage and established private companies, as well as some public companies.
“Investors have regained an appetite for biotech shares, and the past 4 months have seen a tremendous increase in initial public offerings by biotechs. So far this year, there have been 23 IPOs, with 15 alone since May. The average 47% return for these shares since their IPO shows that investors’ confidence is well placed. Over 70% of this year’s IPO class have presented previously at the BIO Investor Forum. This event is the ideal venue for investors and business development leaders to meet, discuss and explore potential partnerships and business collaborations to fuel research and development for promising innovation,” said Alan Eisenberg, executive vice president, Emerging Companies & Business Development at BIO.
Last year, the conference saw more than 650 meetings and some 110 late-stage private and just-emerging public companies. It’s likely this year’s numbers will handily beat those. More than 100 biotech firms that are on track to join this year’s “watch list” will present, and it’s expected there will be plenty of exchanges of interest between potential investors and capital-hungry biotech firms.
In general, this is a good time to be exploring your options for investing in biotech firms. You would still face delayed ROIs, but more companies are experiencing successful IPOs than not, which is an excellent predictor of the future.
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