The pace of biopharma IPOs year-to-date is impressive. The chart below shows the data through late-June, and with the round of IPOs that just launched in early-July we are on pace to exceed 2015’s IPO issuance. (Exhibit 1) This would make 2018 the fourth biggest year for new biopharma issuance in the last 20 years.

Exhibit 1: Biopharma IPOs

Source: Jefferies

The average percent return, depicted below (Exhibit 2), for biopharma IPOs have been quite high. That is certainly helpful for the pace of new issuance.

Exhibit 2: Average Percentage Return of Biopharma IPOs

Source: Jefferies

The median percent return tells a favorable story as well, but indicates that upside outliers meaningfully skew the average.

Exhibit 3: Median Percentage Return on Biopharma IPOs

Source: Jefferies

A granular view of initial pricing to-date for 2018 new issues shows three upside outliers (including a takeout), but an otherwise linear distribution from +50% to -50%.

Exhibit 4: Biopharma Initial Pricing To-Date 2018

Source: Driehaus

Those outliers to the upside certainly stand out, however, perhaps more impressive is that multiple companies that have been public for fewer than six months have traded down to cash.

We continue to see opportunities to pick winners and avoid losers in development-stage biopharma, and the data above illustrates that discretion and a clear process for evaluating companies and deals continues to be critical.