Once-Dreary IPO Outlook Brightens For Second Half of 2023

Once-Dreary IPO Outlook Brightens For Second Half of 2023

June 30, 2023, Law360

Law360 featured Megan Gates' commentary in an article analyzing the capital markets landscape for the second half of 2023.

Megan noted that biotechnology firms, which went dormant last year after a surge during the COVID-19 pandemic, are slowly returning to the fore. Megan also mentioned that there was an increase in follow-on offerings in June among early-stage drug developers.

"We're seeing more liquidity in the follow-on market," Megan said. "That's a reason for hope."

However, Megan cautioned that a full rebound in biotechnology IPOs may not happen until 2024, noting that many life sciences firms are reducing jobs after aggressive growth during the pandemic. Plus, she noted that some investment bankers appear cautious about taking biotech companies public while the sector seeks to regain its footing.

Cash-hungry biotechnology companies are also exploring IPO alternatives that don't involve underwriters, Megan said. Options also include reverse mergers, by which a new business combines with a publicly listed company that has cash on its balance sheet but may have otherwise gone dormant because its clinical trials have stalled.

"The theory behind the marriage is you've got one party with a bunch of cash and another party with a promising clinical asset and a desire to be public," Megan said. "So put them together, and hopefully it goes somewhere."

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