Investment

If the boom in biotech IPOs is over family offices won’t be happy

A recent surge in biotech IPOs haven’t quite met investor expectations raising some concerns about future listings in the sector from backers like family/private investment offices. 

Biotech continues to be one of the favourite parts of the venture world for family and private investment offices. But recent returns from a number of IPOs of biotech companies and delayed listings of others, coupled with slowing economic growth in the US and much of Europe, have dampened previously very strong enthusiasm. 

Out of the 153 companies that have filed for IPOs this year up until September, 48 have been in healthcare, more than any other sector

Last week, German biotech company BioNTech made its debut on the US technology exchange Nasdaq, but disappointed investors after selling fewer shares and at a lower price than expected. Some of the $600 million-plus pre-IPO funding into BioNTech came from family capital, including ATHOS Service, the family office of pharmaceutical entrepreneurs and brothers Thomas and Andreas Strüngmann, and Jebsen Capital, the corporate venturing arm of the family-owned Jebsen Group. 

ATHOS and Jebsen Capital both backed BioNTech, which is developing personalised immunology therapies, in a Series B round worth $325 million in July, representing Europe’s biggest-ever biotech venture deal. That round valued BioNTech at around $4 billion, whereas the IPO valued BioNTech closer to $3 billion. 

Massachusetts-based Frequency Therapeutics, which listed in early October, faired better, but even here expectations weren’t fully met, as the share price fell back below its anticipated $14 price before debut.  

Private investment office backing of Frequency Therapeutics, which is developing molecule drugs to activate cells to restore healthy tissue, included Alexandria Venture Investments, the private investment vehicle of Joel Marcus, and Cobro Ventures, a biotech investment company owned by Alain Cohen and Marc Cohen.

Weaker IPO price expectations led Swiss-based biotech group ADC Therapeutics to pull its listing scheduled for early October. 

Up until last month, IPOs have proven a popular form of raising capital for biotech ventures, as well as realizing returns for their backers. Out of the 153 companies that have filed for IPOs this year up until September, 48 have been in healthcare, more than any other sector, according to IPO research firm Renaissance Capital. But these latest developments for biotech IPOs might stem that tide – at least until more certainty is forthcoming on the economic health of the big economies. 

That said, venture investing in biotech from family/private investment offices continues apace, as Family Capital’s weekly deal summary shows. Some recent deals included the Weinstein family’s investment in Convexity Scientific and US-based Molecular Assemblies backing from Alexandria Venture Investments

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