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Is the early-stage IPO making a comeback?

October 5, 2012
Yesterday was the NASDAQ debut for preclinical-stage biotech Regulus (RGLS). The microRNA platform company is working in multiple therapeutic areas and planning to reach the clinic in 2014. Since the start of the 2009 post-market crash window for biotech IPOs, there have been only two preclinical biotech companies to make it to the public stage.

Back in January, we saw Verastem (VSTM), at only 1.5 years of age, make it to the NASDAQ and raise $55M. At that time they were preclinical, looking to put a cancer stem cell targeted therapy into Phase I for breast cancer.1 The Verastem IPO gave many biotechs, bankers, and VCs hope that emerging biotechs could not only make the public exit, but could also raise more than the original goal set in the S-1 filing.

Verastem was significant in that they were the only pre-market therapeutic biotech IPO to raise more than they anticipated in their filing. To date, only two companies with marketed products, Sagent (in 2011) and Talecris (back in 2009), have been successful in raising more money than their initial filing. Regulus originally filed to raise in the $45-$54M range. Coming in at the low end of that range yesterday is positive news considering the biotech IPO class of 2012 is averaging 23% below target, with some biotechs only raising 50% of what they initially filed for.

Will the early-stage exits continue? So far, 2012 is the first year in five years to see these early-stage companies go public. Of the 32 therapeutic IPOs since the 2008 trough, nine of them had marketed drugs or in NDA/BLA filing at the time of the IPO, 12 have been in Phase III, nine have been in Phase II, and none have been in Phase I. To find out if this break in the "de-risked only" exit trend could continue into 2013, come hear investors, bankers, and biotech CEOs next week at the BIO Investor Forum in San Francisco.

1 For more on recent developments for Verastem, Oncomed, and Stemline in cancer stem cells , come to next week’s panel “Cancer Stem Cells – Real or Just Hype?” at the BIO Investor Forum in San Francisco, moderated by Nathan Sadeghi-Nejad of Forbes and