On Monday, Mirna Therapeutics of Austin, TX, ignored the turmoil on Wall Street and filed to make its Wall Street debut in a planned $80.5 million initial public offering. It was the eighth biotech or specialty pharma company to file for an IPO since July 1, according to IPOMonitor.com—this after a sizzling first half when 50 biopharma companies went public in the U.S. or abroad, raising over $5.1 billion. So does Mirna’s move signal that the appetite for biotech IPOs is still strong? Or do the stock market vacillations portend a long-feared biotech crash?
To begin to answer those questions, it’s important to consider that cyclical swings in biotech don’t always track with what the broader market is doing. Booms and crashes are more closely related to scientific advances—and, more importantly, predictions and perceptions about whether those advances will translate to billion-dollar blockbusters. That’s why some experts are predicting that the wide-open door for biotech IPOs isn’t going to slam shut anytime soon.
One of the biggest factors driving the optimism in biotech’s future is the recent run of FDA approvals, says Sam Zucker, a partner at Sidley Austin in Palo Alto, CA, who manages corporate transactions in the biotech industry. This year so far, the FDA has approved 25 “new molecular entities” (NMEs) and rejected only three—an approval rate of 89%–according to BioMedTracker. In 2014, the agency approved 41 NMEs, which was the most it had approved since 1996. “That creates a perception that drug development is less risky than it was a few years ago,” Zucker says. “There used to be a perception that the FDA was making it harder to get new drugs approved by requesting additional trials that would be hugely expensive and risky for companies. There’s been a reversal.”
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