Health

Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

For more than a year now, every time the biotech IPO window has seemed to open a crack it has rapidly slammed shut. But a recent surge of deals and a period of relative stability in the market suggest this time might be different.

Keeping Up
In sharp contrast with last year, the Nasdaq Biotech Index has outperformed the broader market this year
Source: Bloomberg

Last year saw the smallest number of biotech IPOs since 2012 -- 36 offerings that raised about a third of what 2014 or 2015's bumper crops raised. But things appear to be looking up. The second quarter is less than halfway over, and already new companies have raised nearly as much money as they did in any quarter in 2016. 

Slow Lane
Biopharma companies have been hesitant to go public since drug-price controversies began hurting valuations sector-wide
Source: Bloomberg
U.S. and Europe domiciled companies

BioHaven Pharmaceutical Holding Co. last week priced the second-biggest biopharma IPO since the beginning of 2016. Ovid Therapeutics Inc., which priced a day later, raised $75 million. UroGen Pharma Ltd. also priced a $58 million deal Wednesday.

The companies represent a variety of different biotech approaches. BioHaven hopes to rapidly bring to market drugs other pharmaceutical companies have abandoned. Ovid has early-stage neurology and rare-disease drugs. UroGen has a gel meant to deliver chemotherapy to the bladder.

In less than five months this year, six biopharma companies have successfully priced IPOs worth at least $75 million each, already matching the number of such IPOs that launched in all of 2016.

Looks like momentum to me. 

Starting Strong
2017 is already shaping up to be a better year for biotech IPOs. Highlighted firms priced their IPO in 2017, all others in 2016
Source: Bloomberg

That matters a lot in an industry with an endless array of small companies itching for public money to fund their research efforts, and where investor appetite has so much to do with sentiment. 

The drug-pricing controversies that made 2016 so inhospitable to new biotech stocks are by no means gone. PTC Therapeutics Inc. just cut the cost of a highly priced steroid after a public uproar. And pressure from insurers and pharmacy benefit managers is still taking a toll on pharma's pricing power.  

But there hasn't been a notable attack from President Donald Trump on drug pricing in some time. And there were already signs investors were starting to think he's more bark than bite on the issue. A number of industry leaders met with the president on Monday, and his tone was notably softer than it was after a similar confab earlier in the year. The Republican health-care bill does not even make a gesture at drug pricing and has pushed the health-care cost debate far away from pharma. 

Companies seem to feel good enough to test the waters again. If the pricing criticism cease-fire continues and a few clinical successes or M&A headlines add to the sector's momentum, then the crack in the biotech IPO window could widen substantially. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Max Nisen in New York at mnisen@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net