Kyverna Therapeutics Inc. disclosed a filing to raise up to $100 million in an IPO, becoming the sixth firm to announce plans for a U.S. listing in the new year, offering tentative hope that the public markets might prove more welcoming to biopharma firms after a lackluster 2023.
Biopharma firms collectively raised $70.97 billion in 2023, a welcome upturn of 17% from the $60.81 billion raised in 2022. Although falling short of the $118.29 billion raised in 2021 and $134.53 billion raised in 2020, by 40% and 47%, respectively, 2023 stands firmly in the third-highest place in BioWorld’s records going back to 2011.
Most categories of med-tech financings peaked during the COVID-19 pandemic, with the highest values seen in 2020-2021. While public/other and private financings have successfully rebounded to pre-pandemic levels, the aggregate financings for 2023 hit an unprecedented low according to BioWorld’s records.
The biopharma industry is still adjusting from the heady days of the COVID-19 pandemic, and nowhere is this so apparent as in financings. The value of financings has returned to what could be called a new normal, down from the surge of capital seen in 2020-2021. However, there are signs that the trend is heading back upward at a steady pace.
A catastrophe was averted over the weekend of March 11-12, 2023, when the U.K. government and the Bank of England orchestrated the rescue of the U.K. arm of Silicon Valley Bank, after its U.S. parent was shut down by the receiver. While that saved dozens of small biotechs with large deposits at the bank, it signified the fragile economic environment during the year, compounded by wider geopolitical frictions, with a market described by Chris Hollowood, CEO of Syncona Investment Management, as “the worst in my career.”
In one of the larger biopharma IPOs in 2023, Cargo Therapeutics Inc. pulled in $281.3 million on Nov. 10, selling 18.75 million shares at $15 each, the low end of its price range. The market debut comes just eight months after the San Mateo, Calif.-based company raised $200 million in an oversubscribed series A round.
The latest firm to brave the rough IPO market, Lexeo Therapeutics Inc. made its Nasdaq debut after pricing about 9.1 million shares at $11 per share, raising proceeds of $100 million to advance its early clinical work on gene therapies for cardiovascular and neurological diseases.
The public markets have hammered biopharma companies conducting IPOs in the past four years, with the number of debuts dwindling and the amounts raised falling dramatically as well. But one of the more telling measures is price performance, which is significantly down for all IPOs completed since 2020. The stock prices of 13 firms that entered the U.S. markets in 2023 are currently at a decline of 26.8% on average, with only two companies trading above their offering price.
Abivax SA’s debut on the U.S. market received a somewhat chilly reception Oct. 20, as the firm priced on the low end of its proposed range and ended the first day of trading in the red. But the company managed to pull in about $235.8 million in gross proceeds, the majority of which will support late-stage efforts for obefazimod, an oral candidate with a novel mechanism of action it hopes to advance in the lucrative inflammatory bowel disease space.
Biopharma financings in 2023 – at $49.3 billion raised through the third quarter (Q3) – are tracking ahead of, or only slightly behind, several years since 2011, except for the two outlier years of 2020 and 2021 when there was a flurry of investments in response to the COVID-19 pandemic.
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