2018’s Biotech IPO Bonanza: View From the After Market

2018 has so far been another gangbuster year for biotech IPOs: the first three quarters of the year have delivered nearly 50 new biotech offerings, reinforcing the strong new issuance performance of the past 6 years.

With lots of pundits raising concerns about the market overheating with positivity on good days, or over-selling negativity on bad days, it’s worth reflecting on how the data this year actually matches up in terms of post-IPO share performance versus prior years.

Geoffrey Porges at Leerink recently put out a great report looking at the entire IPO window from 2013-2018 and the returns generating by new biotech offerings. It’s as you might expect: the measure of central tendency of the performance distribution (medians, means) are not attractive, but, the best winners, roughly 20% at the top and reflective of the Pareto power law, captured most of the share price and valuation gains.


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Science2Startup 2019: Bringing Venture & Academia Together

After last year’s inaugural success, we’re excited for 2019’s Science2Startup conference in April 2019, an invitation-only university-focused biotech entrepreneurship event aimed at building connectivity across the academic, tech transfer, and venture communities.

Working with a steering committee comprised of Atlas, F-Prime Capital, RA Capital, Osage University Partners, and MassConnect, we’ve got a great Science2Startup (S2S) planned for April 23, 2019, once again hosted at the Broad Institute in Cambridge, MA.  

As described last year, the mission of S2S is to connect world-class academic science with the venture ecosystem to stimulate the creation of innovative therapeutic discovery startups. We again hope that S2S can help “catalyze the convergence of ideas, people, and capital that will foster new venture formation”.

The event brings together investors, entrepreneurs, and academic colleagues to talk about innovative therapeutics coming out of universities worldwide and how we can work together to translate these ideas into

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Targeting Aging Comes Of Age

This blog is written by Tom Hughes, CEO of Navitor Pharma, as part of the From The Trenches feature of LifeSciVC.

We finally are beginning to understand the biological basis of aging and age-related diseases, making the discovery of new therapies actionable for the first time.

Aging and its underlying biological mechanisms are becoming recognized as a catalyst, if not THE central catalyst, for a wide range of poorly treated prevalent diseases.  A recent piece in The Guardian is a great example of how well-recognized this link is becoming, and the emergence of an anti-aging biotech community is described here.  The upshot is that this is a promising new area in science providing actionable insights with potential for tremendous impact on human healthspan.

I have been following the field of the biology of aging since the beginning of my career in science, more than thirty years, while working

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Bring Your A-Game for BD

This blog was written by Deanna Petersen, CBO of AVROBIO, as part of the From The Trenches feature of LifeSciVC.

As with most professions – especially those that involve longer-term outcomes – the way people get good at BD is with experience. So, I’d like to share some of my experiences doing BD from various vantage points, with the hope that it might help you jump start the career of anyone interested in BD. Or for those not in BD, this may give you a peak behind the curtain for this professional area that is so active and at the intersection of many disciplines in drug development.

Here’s a bit of background, so you know where I’m coming from. I started my business development career in the tech transfer group at a university, then moved to a biotech start-up, then a late-stage company, then a larger pharma company (Shire). 

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Fear Of The Flood: Post-IPO Lockup Expiry In Biotech

The dreaded “lockup expiry” is something all newly-minted public biotechs begin to worry about shortly after their offerings. The fear seems reasonable: venture investors and other large shareholders, now free to trade, dump large amounts of stock into the market quickly, creating significant downward pressure on stock prices.

Should they be worried about a flood of stock impairing their stock prices?  The data suggests, in general, this isn’t a real concern: its more urban legend than reality.

Here’s some background: all major private shareholders, including VCs, typically sign what’s called a lockup agreement during an IPO process.  This forbids these shareholders from selling their stock during the first 90- or 180-days after an offering.  Once past that date (the “lockup expiry date), these shareholders are generally free to trade their stock – unless they remain insiders.  Insiders would include any shareholder privy to material, non-public information,

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Biotech Climate Change

This post was written by Ros Deegan, CBO of Bicycle Therapeutics, as part of the From The Trenches feature of LifeSciVC

When I first moved from the UK to the US, I told my parents that there was more biotech VC investment in Cambridge, MA each quarter than there was in the whole of the UK in a year. Since then, my mother has been cutting ‘biotech is booming’ articles out of British newspapers to tempt me ‘home’. This stack of press clippings reflects the UK’s intention to become the ‘third global biotech cluster,’ which highlights the reality that aside from the top two clusters in Boston and San Francisco, the US looks a lot like Europe (as discussed by Bruce Booth in ‘The Inescapable Gravity of Biotech’s Key Clusters’). The heat of the biotech ecosystem in these coastal cities is gathering talent, science and investment from cooler

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The Rising Tide Of Biotech IPO Valuations

The biotech IPO market continues to march forward, with five new offerings expected to price in the next week or so. Investor demand for stories advancing novel innovative therapies remains at historic levels – extending what is now over a six-year window for biotech IPOs.

To frame up how the IPO markets have evolved over the past six years, it’s worth reviewing the data around the changes to pre-money valuations over time.  The trend line is clear: up and to the right.

At least two observations from these data are worth noting.

First, the median pre-money valuation of new biotech offerings has risen in value from $150M to nearly $350M during this period – or an increase of over 130% from 2012-2014 levels.  That’s staggering, and reflects the significant uptick in IPO demand, especially in 2017 and 2018, as this cycle has progressed. As the window opened in

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The Incredible Expanding Universe of Biotech Stocks

The biotech sector is unique relative to the rest of the stock market in many ways, but one that is often overlooked: its expansionary public equity market footprint.

It’s been well appreciated by market analysts that the universe of U.S. public equities has shrunk remarkably over the past 20 years, from nearly 8000 listed companies in 1996 to just over 4000 today.  A combination of fewer gains (new listings like IPOs) and more listing losses (from M&A and delistings) has dramatically reduced the pool of public stocks investors can trade by almost 50% over two decades. This has led to the observation that the typical listed stock is now a much more mature company than it was 20 years ago.

Credit Suisse put out a fascinating report titled “The Incredible Shrinking Universe of Stocks” last year that covers the topic in depth, highlighting how the benefits

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Biotech Venture Deal Terms Are More “Startup-Friendly” Than Ever

Biotech is booming, with eye-popping new financings seemingly announced daily. The sector is having an epic year for startup fundraising, breaking records for what will end up as the most active private biotech financing year ever.

Although overall sentiment in the VC-backed biotech ecosystem is hard to explicitly measure (i.e. there’s no “index” traded daily), its clearly a very bullish period in the investment cycle. Some of this excitement is clearly warranted – lots of great new therapeutics are addressing the needs of patients, as science is maturing into medicine at an incredible pace.  That said, as some pundits have noted, some of this is also more about “hypelines” than pipelines, where investors may be exposed to the over-promising, under-delivering behavior exhibited by some biotechs.

To frame up one perspective on how the current private capital market compares to the past, our friends at the law firm

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IPO: A Go-Go Or A No-No?

This blog was written by Jeb Keiper, CFO & CBO of Nimbus Therapeutics LLC, as part of the From The Trenches feature of LifeSciVC.

Elon Musk has a flare for the dramatic, shocking Wall Street (and others) the first week of August with his tweet announcing his intentions to take $TSLA private:

The financial and auto industry spent a lot of energy working out the “hows” and “whys” of going private, and many comparisons were made to the large leveraged buyouts (LBOs) of the “Barbarians at the Gate” past.  In biotech, “going public” is the thing to do: 2018 has been a banner year for IPOs. Rubius Therapeutics ($RUBY) raised an eye-popping $241 million last month, and it’s just one of more than 30 biotechs to go public since January. The strength of these IPO cash hauls raises the question: With

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Hard Core Values

This blog was written by Tariq Kassum, COO of Obsidian Therapeutics, as part of the From The Trenches feature of LifeSciVC.

Early in the morning of April 24, 2018, I woke with a knot in my stomach because I knew that a tough negotiation – perhaps the most challenging of the year – lay ahead. In a few hours we would determine the future of Obsidian Therapeutics. We had to get it right. I rubbed my eyes wearily and hit the gym to chase the butterflies away. Not even a series of lung-curdling sprints on the Concept 2 could alleviate the tension.

We had rented a conference room downtown to provide a neutral environment. I arrived early to make sure the snacks and whiteboards were in place, and I fussed with the A/C to prioritize alertness over comfort. Things were about to get real.

My colleagues entered. We sat down,

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Hotspot Therapeutics Turns Up The Heat On Natural Allostery

Most conventional small molecule drugs engage directly with the engine of a protein’s function, aiming to often turning off an enzymatic activity associated with a disease. These drugs bind and compete against the natural substrate of the protein at what are known as orthosteric sites. But other pockets on a protein can also modulate function, and these sites commonly referred to as allosteric sites.

Nature commonly uses specific allosteric sites, distal to their active engines, to regulate the functional activity of proteins. Because of this potential powerful role, allostery has fascinated the pharmaceutical industry for decades as an approach that could open up otherwise challenging drug targets.

To date, the industry has made reasonable traction at making allosteric modulators for ion channels and transmembrane proteins on the surface of cells. Positive allosteric modulators (PAMs) and negative allosteric modulators (NAMs) are being exploited to regulate the activity of many cell types,

(Jon Chomitz Photography)
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A Hat Trick Of Cell And Gene Therapy IPOs: Avro, Magenta, and Unum

Last week, AvroBio and Magenta Therapeutics priced their IPOs on the same night. Less than three months earlier, Unum Therapeutics priced its IPO.

All three biotech companies are emerging leaders in the cell and gene therapy space, broadly defined. They are now well financed for the next chapter in their respective journeys to bring new potentially transformative therapies to cancer, rare disease, and autoimmune patients.

All three are also companies that I’ve had the good fortune and privilege of playing a small part in shaping, serving as chairman of both Unum and AvroBio and being a founding investor/director of Magenta. Participating in three IPOs in less than three months has been a fun and eye-opening experience, so I thought it might be worth sharing a few reflections on these stories, the broader IPO market, and cell and gene therapy.

For context, here’s a quick background of each.

Float Like A Butterfly: Agility In Biotech

This blog was written by Jonathan Montagu, CEO and co-founder of Hotspot Therapeutics, as part of the From The Trenches feature of LifeSciVC.  

In the quest towards building high-performing teams, biopharma can lift a page from the tech playbook around agile organizations.  This blog builds upon comparisons with tech relating to business model, investment returns and the dynamics of the different VC ecosystems.  In this post, I would like to draw lessons from how tech startups actually work and organize themselves.

One of the most dominant themes in tech is Agile software development, an approach that has been adopted by all of the most successful startups around the world.  Agile involves creating a simplified piece of software that is then iterated rapidly through input from real customers.  Iterations are generally short – typically one to four weeks – and are aptly called ‘sprints’.

On its

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Farewell to Zafgen: A Personal Reflection On Board Evolution

Today, Zafgen announced my resignation from their Board of Directors after 12 years of service.

It’s a bittersweet moment for me: having been there since the beginning, I’ve watched, and supported, the Zafgen story through all the ups and downs that a dozen years can bring. My partners and I at Atlas Venture remain significant investors and supporters of Zafgen and its mission; my departure has nothing to do with a lack of enthusiasm, and my partner Peter Barrett remains Zafgen’s chairman.

But it’s time for me to sign off to focus on other startups in our portfolio and the “day job” of investing in new ideas; in fact, this board resignation is actually the first time I’ve left a Board of a portfolio company that wasn’t an “exit” event for Atlas. Importantly, Boards, like the companies they represent, have to evolve over time.

Before sharing a few thoughts on

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Biotech CEO Pay: Inflation Held At Bay

The private biotech sector is awash in capital today: funding over the last few quarters has been record-breaking, up over 250% since 2013, as biotech CEOs have worked hard to strengthen their companies’ balance sheets.  But in the process of filling up their corporate coffers, have they also filled up their own wallets?

To examine this question, I worked with Jody K. Thelander and her team at J. Thelander Consulting, a compensation data and consulting firm, and explored their recently completed 2018 Private Company Compensation survey dataset.  Several interesting findings worth noting.

First, as you might expect during the journey of a startup, the total cash compensation (base salary plus target bonus) for biotech CEOs goes up in a remarkably linear fashion as companies raise more capital – up until they approach public company CEO compensation. Here’s the latest 2018 data:

Second, over the past 6-8 years,

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Trains, Bicycles, And Business Development

This blog post was written by Ros Deegan, CBO of Bicycle Therapeutics, as part of the From The Trenches feature of LifeSciVC.

It’s heresy to write this but it’s trains not bicycles that come to mind when describing our partnering strategy at Bicycle Therapeutics. We’re looking to speed Shinkansen-style towards our goal of being an integrated oncology company while monetizing the platform and building an engine for future growth in additional diseases. We can only do this by establishing partnerships both inside and outside of our core therapeutic area. Partnering outside of your core expertise can be challenging since you are pitching early-stage data from your lead therapy area, the relevance of which may not be immediately apparent. Despite these constraints, we’ve stayed on the tracks by applying four key principles:

  1. Seeking foundational patent protection so we can approach potential partners from a position of strength;
  2. Identifying areas of high
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New Directions In Alzheimer’s Disease Research And Development

This blog was written by Adam Rosenberg, CEO of Rodin Therapeutics, as part of the From The Trenches feature of LifeSciVC.

Disappointing results in Alzheimer’s clinical trials seem to be announced on an almost monthly, and sometimes weekly basis:

Unfortunately, these are just a few examples…there are many more.

If there is a silver lining to so much crushing disappointment, it’s this: We can learn from prior clinical development attempts, most of which were undertaken by highly qualified researchers and clinicians, based on good-faith data.

Further, new biology and chemistry ideas are moving forward, new preclinical and clinical tools are being developed and validated, and recent regulatory announcements suggest an understanding of the unique challenges in Alzheimer’s clinical development.

Translational Tools

Early and mechanistically relevant biomarkers are critical to breakthroughs in neuroscience, as I argued in my February 2016 blog post, Are We Poised

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Right From The Beginning: Returning To The Origins Of The Orphan Drug Movement

This blog was co-written by Doug Kerr, Head of Preclinical Research & Clinical Development, and Geoff McDonough, CEO, both of GenerationBio, as part of the From The Trenches feature of LifeSciVC.

Our industry stands at the beginning of the most significant opportunity to impact genetic and metabolic disease we have ever encountered – the ability to decisively intervene in the perinatal period with therapies capable of lifelong transformation.  To fully seize this opportunity, we must act with urgency to bring the benefits of the Orphan Drug Act to its youngest intended beneficiaries…

The world has changed dramatically for patients suffering from rare genetic diseases. Since the Orphan Drug Act of 1983, there have been 590 drug approvals for orphan diseases compared to only 10 in the prior decade.  Thanks to the enormous scientific advances associated with the human genome project, drugs approved under the Act target the underlying

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Another Trophy Quarter For VC-Backed Biotech Funding

The flood of capital continues to pour into the private biotech ecosystem, marking the current climate as the most prolific period of investing into the sector of all time.

The first three months of 2018 secured yet another “biggest quarter ever” trophy for the sector, hitting nearly $4.7B in funding.  This is the third such quarter in a row, which prompted a similar post on the “Boom or Bubble” last fall. Here’s the last 40 quarters of private biotech funding, according to Pitchbook.

The staggering funding comparison is that in 2012 and 2013, during the opening of the IPO markets, the entire US-based biotech venture sector over those full years invested roughly the what we did in just the current quarter (1Q 2018), around $4.5B.  That’s a 3-4x increase in capital.

As I’ve noted in the past, the source of this new wellspring is

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