There has to be a lot of optimism among pharmas that have decided to go public as a way of generating cash for their start-ups. Around 30 biotechs have gone public so far in 2013, with more than $4 billion raised through IPOs to fund late stage trials for promising and novel therapies. With government and venture capital funding hard to come by, it may seem the rational step for a young company to take in order to get their ideas off the ground.
And yet...there hasn't been this many biotech public offerings since 2000 and so some analysts are hesitant to roundly endorse the sudden surge.
David Grainger, a partner of London-based Index Ventures, told The Scientist that IPO investors might be more exuberant than the current climate warrants. "In some cases, there may be examples of companies that succeed in getting an IPO done that perhaps wouldn't have done were it not for that bubble-like herd behavior [of investors]. And if those companies then crash . . . then there's a danger we will flip from the current headlong rush back into the bust state," Grainger said.
John Carroll at FierceBiotech writes:
"Getting a fresh source of capital and $2 billion to pump into clinical trials is a positive development for biotech. But in just a few short months, the market has moved from a deep chill to tropical heat. We know from past booms that once the frenzy begins, funds start chasing big returns and throw fundamentals out the window. With Intrexon, the biotech IPO boom looks increasingly overheated." (Intrexon recently raised $160 million through its public offering.)
What many fear, of course, is a repeat of the dot-com bubble of 1999-2000.