Biotech IPO activity in 2Q is strongest since 2000, report says

Initial public offerings are back, particularly in the life sciences.

Chimerix (NASDAQ:CMRX) and Quintiles (NYSE:Q) were among the life science companies who went public in the second quarter. ChannelAdvisor (NYSE:ECOM), a Morrisville company that offers e-commerce software, also went public in the second quarter. While Chimerix and ChannelAdvisor were backed by venture capital, Quintiles, which raised more than $1 billion from its IPO, was backed by private equity investors.

A total of 21 venture-backed companies went public in the second quarter, raising $2.2 billion – more than double the amount compared to the first quarter of 2013, according to a new report by Thomson Reuters and the National Venture Capital Association. The number of IPOs for the second quarter was a 90 percent increase compared to the number of deals listed during the second quarter of 2012.

Biotech IPOs had a particularly strong showing. The second quarter had the highest number of biotechnology venture-backed IPOs since the third quarter of 2000.

But even as IPOs were on the rise, M&A activity waned. In the quarter, 83-venture backed M&A deals were reported; 14 of them had an aggregate deal value of $2.4 billion. That’s a 59 percent decrease in volume from the second quarter of 2012.

Mark Heesen, president of the NVCA, said that the low number of acquisitions appears problematic on the surface. But the NVCA’s analysis indicates interest in acquisition of venture-backed companies, suggesting that the companies are holding out for better pricing from potential buyers.

“With an improving IPO market, this situation will only improve for our companies,” Heesen said in a statement.

Durham-based Quintiles, the largest provider of services to pharmaceutical companies is currently trading at $42.75, up 6.8 percent from its $40 per share IPO price. Research Triangle Park-based Chimerix net more than $107 million following its April 11 IPO. Chimerix is trading this morning at $24.09 per share, up more than 72 percent from its $14 per share IPO price. ChannelAdvisor raised more than $80 million from its May 23 offering. The Morrisville company is currently trading at $16.10 per share, up 15 percent from its $14 per share IPO price.

Biotech IPOs were the majority of the public offerings from venture-backed companies in the second quarter, representing 13 of the 21 offerings. Prosensa BV, a Netherlands-based biopharmaceutical company, was the largest biotech IPO raising $78 million on the NASDAQ exchange on June 28.

The largest venture-backed IPO of the quarter was Seattle-based Tableau Software, a provider analytics and data visualization software. Tableau raised $292 million and began trading on the New York Stock Exchange on May 16.

The largest venture-backed M&A transaction during the second quarter was Yahoo! Inc’s $1.1 billion purchase of Tumblr, Inc, a New York-based social networking publishing platform. Tumblr was Yahoo! Inc’s fourth acquisition of a U.S. venture-backed company this year.