Biotech is just swimming in money right now

Biotech is famously cyclical, with tides that tend to raise and sink all boats just as quickly. But right now, according to data from SVB Leerink, things are going pretty well.

Over the past 12 months, about $177 billion has found its way back to investors’ pockets thanks to buyout deals, and 36% of that sum has come in the form of premiums, dollars that exceed a company’s share price before the takeout. Over the same period, $28 billion has flowed into IPOs and follow-on offerings, suggesting to SVB Leerink’s Geoffrey Porges that there’s a virtuous cycle at work.

There’s no way to be sure those cash-laden investors are putting their gains into buying new equity, but “the magnitude of these liquidity events could explain the surprising durability of the capital markets cycle in the sector,” Porges wrote. The other side of that token, of course, is that if the generally unpredictable pace of buyouts slows down, so too could the demand for IPOs and FOs.