Biotech financing in a COVID year hits record

As the COVID-19 pandemic raged around the globe last year, biopharma capital markets were robust in 2020, with a record $13.5 billion raised in 81 initial public offerings (IPOs) and $41.1 billion in 256 follow-on offerings (FOs), noted SVB Leerink analyst Geoffrey Porges.

More capital was raised in more biopharma deals in 2020 than any prior year in biopharma history, and the capital and deal numbers for 2020 were 45% and 18%, respectively, above the trailing three-year deal averages for the sector. Additionally, average IPO deal size was larger in 2020 than any other year, with an average IPO size of $167 million. Average FO deal size was strong as well at $160 million, though not record-breaking.

Mean and median file-to-offer premiums for IPOs completed in 2020 were higher than any of the last seven years at 4% and 5%, respectively. Further, biopharma companies that completed IPOs in 2020 saw higher mean and median 1-day, 1-week, 1-month, and 1-quarter post-IPO returns than companies that completed IPOs in 2017-2019, and the returns remained positive even in the fourth quarter. 74% of 2020 IPOs were seeing annualized cumulative returns over 10% near the end of quarter-four, Mr Porges pointed out.