The ‘chess game’ of going public in 2019

If you’re a private biotech company on the Wall Street-bound assembly line, you’re likely to face a quandary. On the one hand, you’re incentivized to raise private dollars at the highest possible valuation, improving the potential return for your early-stage backers. But on the other hand, if that valuation outstrips what an increasingly skeptical public market will bear, you risk having to take a haircut when the time comes for an IPO.

“It’s very much a chess game in this current market, and people have to think multiple steps out,” Noel Brown, a managing director with Cantor Fitzgerald, said at the BIO CEO and Investor Conference.

Brown, speaking on a panel of advisers, bankers, and analysts, took the long view on the state of biotech IPOs. The anything-goes market of the recent past may have waned, but compared with, say, 2008, biotech is on a run of form any industry would envy, he said.

And, as Cowen senior analyst Yaron Werber pointed out, going public gets a lot of attention, but it’s a milestone, not an end in and of itself.

“It’s like a bar mitzvah,” Werber said. “What does that mean? It’s a big party, sure, but it’s just another part of a company formation in a long, long journey.”