Daily Management Review

IPOs in US biotech hit record high


US-listed biotechnology companies have had total IPOs of $ 9.4 billion since the beginning of this year, already surpassing the record $ 6.5 billion of 2018, according to Dealogic data.

Biotech stocks are up 34% on average this year on the first day of trading after the IPO, the best performance for the sector since the 2000 tech boom, The Wall Street Journal reported. Interest in shares of biotechnology companies goes beyond IPOs, experts say.

The Nasdaq Biotechnology Index has jumped 13% since the beginning of this year, while the S&P 500 has increased by only 3.7%. Investors are buying up shares in companies developing vaccines against COVID-19 and are betting that public investment in the biotech sector will grow.

Public companies are actively taking advantage of the increased inflow of money into the sector and placing additional shares. Since the beginning of this year, the volume of additional placements reached $ 32 billion, which, according to Dealogic, is a record level.

Experts, however, warn that stocks in biotech companies could be quite volatile, as their price often depends on the success or failure of work on certain drugs. Many also believe that the enthusiasm for biotech companies is excessive, especially for companies developing coronavirus vaccines.

One example of high investor expectations is Moderna Inc., which has already begun its third phase of vaccine testing, developed in partnership with the US National Institute for the Study of Allergic and Infectious Diseases. The company's capitalization, which was about $ 7 billion at the beginning of this year, is currently approaching $ 30 billion.

Investors are focusing on the German technology company CureVac BV, which is also developing a vaccine against coronavirus. The company plans to conduct an IPO on the Nasdaq later this year and may receive a valuation of more than $ 1 billion as part of the share offering, WSJ sources say.

source: reuters.com