This is the second edition of our “MTS US Biotech IPO Monitor” where we will use our proprietary database* to generate and discuss thought-provoking statistics and observations. IPO Monitor is one of the pieces published by Strategic Advisory Analytics group at MTS. MTS’ “Strategic Advisory Analytics” reports exemplify our value add strategic advisory services to clients across all healthcare industry sub-sectors. A redacted version of the IPO Monitor can be accessed here. Corporates and institutional investors can request a full version by sending an email to or any partner at MTS.

A strong out of the gate Q1:2018 on number and initial IPO valuations…

• Q1:18 was a strong first quarter in terms of the number of IPOs; 12 in Q1:18, vs. 4 in Q1:17, 6 in Q1:16, 7 in Q1:15, but lower than the banner 26 in Q1:14
• Mean IPO to current performance for class of Q1:18 -5% vs. class of 2017 +67%, class of 2016 +80%, and class of 2015 +20%

…Not so strong on performance

• Only 3 out of the 12 Q1:18 IPOs have posted gains, but at an impressive average of +46%. The 9 underperformers have an average loss of -23%
• Mean IPO to current performance for class of Q1:18 -5% vs. class of 2017 +67%, class of 2016 +80%, and class of 2015 +20%

The Signs of Nervousness? With the “don’t shoot the messenger” caveat, we note the following observations/feedback items

• The lackluster post IPO performance of the Q1:18 IPO class as noted
• “Atypical communications” around the IPO process e.g. the timing and disclosure of FDA clinical holds
• We retain our view that “Indirect Generalist Fund Flows” principally drive biotech IPO windows. There is clear volatility and caution on the broader equity market in 2018
• The number of potential IPO candidates in the pike – there is a time capacity issue to vet companies from the buyside

5 Key Messages From Detailed Analysis of 2012-Q1:2018 IPOs

• 1. “Quality” Over Stage of Asset: Pre-Clinical/PI IPOs Have Higher Raises and Valuations than PIII Companies
• 2. Gene Therapy Companies Continue to Garner Higher Raises and Valuations than Small Molecule Companies
• 3. 85% of IPOs Are Still Trading As Original Entities; Exits: 9% M&A, 4% Reverse Merger, 2% Bankrupt or Delisted
• 4. Foreign Issuers Have Broad Access to US Capital Markets – Higher Quality Companies Eventfully Gravitate to US listings
• 5. ~30% Insider Participation Continues to be an Important Factor for a Successful IPO

*MTS IPO Database
The MTS bespoke IPO database includes the 784 US Biotech IPOs from the first 1979 US Biotech IPO with micro detailed analysis from 2012. Special thanks to Stelios “The Godfather” Papadopoulos for the historic data

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