Biotech took 'fall' literally

Yesterday marked the end of biotech’s worst month in more than two years, an October in which the sector turned negative for 2018 and set alight a lot of speculation that things are going to get worse.

That’s because, despite all the red numerals, not all that much really happened. There was no cross-industry crisis that tanked sentiment. Earnings have generally been unremarkable, ranging from ho-hum to glancingly positive. And the political pressure that once throttled the sector has largely subsided.

And yet there’s that chart above, illustrating how the closely watched biotech index called XBI has flailed since the end of September. We'll see what November brings.

And IPOs were not spared

Meanwhile, as of yesterday, more biotech IPOs have lost money than not.

The industry is on pace for a near-record year when it comes to new listings, as The Wall Street Journal points out, but the class of 2018 is having trouble sustaining the investor enthusiasm that made that near-record possible.

And the latest datapoint isn’t terribly encouraging. Orchard Therapeutics, eyeing a $1.4 billion valuation, ended up pricing on the low end of its range and spent most of yesterday trading underwater. The company’s underwriters eventually swooped in to boost the stock, which helped Orchard close right at its offering price and allowed this guy to keep tweeting.

The next big test of biotech’s IPO infrastructure will come in the form of NGM Pharmaceuticals, another private firm with a valuation exceeding $1 billion and hopes of a future on the public markets.