The memory of biotech’s recent boom faded that much more in the first quarter, as the once-thriving market for IPOs slowed to a four-year low. Now, with April’s first Wall Street debut underperforming expectations, it’s unclear whether the winter slump was a painful blip or a glimpse of the new normal.
Tocagen, a gene therapy company focused on cancer, priced its IPO at the bottom of its expected range, raising $85 million at just $10 a share. The company had hoped to price at $12, and it increased the number of shares offered by 17 percent to help make up the difference. Tocagen traded up after its debut Thursday, closing above $11.50.
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This may be a sign of caution. I’m sure most of these guys were around in Y2K when the VC guys went down in flames when their IPOs went up in a cloud of smoke when the dot.com bubble burst. Timing of an IPO always tricky, and in the case of a company I worked for we canned the idea of an IPO around that time and sought a big pharma buyout. If these biotechs have something marketable they will be better off being bought out by companies on the prowl for the NEXT BIG THING rather than try to go public and watch their stock prices tank. In fact today, in the pharma/biotech/CRO biz the trend is more and more for companies to be taken private rather than go public.