Biotech’s unicorn era may be over
Yesterday, the data firm CB Insights put out a list of 50 future unicorns, and among the many software firms with inscrutable names like Gong, Goat, and Tink, there was not a single biotech company.
CB Insights picks companies using an algorithm “that combines a company’s financial health, the amount of traction it has, and the strength of its market.” (There’s a whitepaper on it, if you’re into that.) Among the 50, only 8% were involved in health care at all, and they’re focused on data and delivery, not inventing drugs.
Biotech’s exclusion is a reminder of just how much things have changed in recent years when it comes to unicorn sentiment. Circa 2017, Moderna, Intarcia, and Samumed were biotech’s biggest private firms. Moderna pulled off an IPO in 2018 but, prior to the coronavirus pandemic, struggled to maintain its private valuation on the public markets. Intarcia's plans were thwarted by an FDA rejection, leaving it with an uncertain future. And Samumed’s reported $12 billion valuation is almost certainly unsustainable.
Now that public investors are consistently willing to buy into early-stage biotech companies, the idea of staying private long enough to reach a $1 billion valuation seems less and less practical.
CB Insights picks companies using an algorithm “that combines a company’s financial health, the amount of traction it has, and the strength of its market.” (There’s a whitepaper on it, if you’re into that.) Among the 50, only 8% were involved in health care at all, and they’re focused on data and delivery, not inventing drugs.
Biotech’s exclusion is a reminder of just how much things have changed in recent years when it comes to unicorn sentiment. Circa 2017, Moderna, Intarcia, and Samumed were biotech’s biggest private firms. Moderna pulled off an IPO in 2018 but, prior to the coronavirus pandemic, struggled to maintain its private valuation on the public markets. Intarcia's plans were thwarted by an FDA rejection, leaving it with an uncertain future. And Samumed’s reported $12 billion valuation is almost certainly unsustainable.
Now that public investors are consistently willing to buy into early-stage biotech companies, the idea of staying private long enough to reach a $1 billion valuation seems less and less practical.
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