The shutdown might scuttle biotech’s IPO ambitions

Among the many inconveniences of the ongoing federal shutdown: It’s hard to go public when most of the SEC is on furlough.

That’s creating a problem for the many companies angling to pull off IPOs in the first quarter, including nine biotech firms that have disclosed their plans. As The Wall Street Journal reports, companies that have already registered to go public are in an awkward spot. With the SEC effectively shut down, there’s no one to sign off on those filings. Companies are free to start pitching investors on future IPOs, but doing so runs the risk that regulators will take issue once they get back to work.

One biotech leader, speaking on condition of anonymity because of the SEC-mandated quiet period for IPO registrants, said the situation has led to some frantic discussions between executives, lawyers, and bankers. Companies could proceed with their investor roadshows under the assumption that everything will go back to normal in time. But if the SEC flags a paperwork issue after the fact, those companies could have to redo the whole endeavor, a costly and potentially embarrassing proposition.