In a region better known for its tech startups and legions of software engineers, it’s biotech companies that have helped lead a recent IPO boom in the state of Washington, accounting for eight of 11 firms joining the public markets via a traditional IPO over the past year.
Since early July alone, three of those companies went public: drug discovery platform company Absci raised $200 million, vaccine developer Icosavax raised $180 million and nervous system therapeutics company Eliem Therapeutics raised $80 million.
In total, Washington state biotech companies have reeled in more than $2 billion in public debuts over the past 12 months.
It’s an unprecedented trend. In the previous four years, Adaptive Biotechnologies was the only Washington state biotech company to go public.
The regional biotech IPO surge reflects what’s happening across the globe, with a record number of biotechs going public in 2020, and new marks expected to be set this year. There have been 92 biotech IPOs this year, raising a collective $12.9 billion, according to EndpointsNews.
The pandemic has given biotech a boost as investor interest grew with the the rapid development of COVID-19 vaccines and therapeutics. The international IPO market is also at record highs, with the deal numbers and proceeds hitting a 20-year high in Q2, according to a report from Ernst & Young. The trend is driven by several factors including low interest rates that make investments in equities stock more attractive.
Bringing a drug to market can take many years and hundreds of millions of dollars. While software companies typically tend to wait for steady revenues exceeding $100 million before moving to an IPO, biotech companies are seeking capital for the long haul, said Oren Lang-Furr, assurance partner and Seattle life sciences leader at Ernst & Young.
“Biotech is a capital-intensive business. These companies see that the markets are favorable,” he said.
Lang-Furr added: “There has been a series of tremendous transactions in biotech over the past 20 years, and some of that money has been reinvested in Seattle.”
When markets are tight, IPO activity tends to concentrate in the major biotech hubs of San Francisco and Boston, said Robert Freedman, co-chair of the Capital Markets and Public Markets group at the law firm Fenwick. But now “investors are casting a wider net,” and “they recognize that there’s more out there,” according to Freedman, who is based in Fenwick’s San Francisco offices but also conducts business in Seattle.
The Pacific Northwest biotech scene is healthy and growing. Part of that is due to veterans of previously successful biotech companies staying in the game.
Sana Biotechnology, for instance, is led by Steve Harr, former CFO and corporate development head at Juno Therapeutics, a Seattle company that went public in 2014 and was later acquired by Celgene for $9 billion. Sana raised $587 million in its IPO earlier this year, just three years after its founding.
Eliem CEO Bob Azelby was also a Juno executive and CEO of Seattle biotech firm Alder BioPharmaceuticals, which went public in 2014 and was acquired by Lundbeck in 2019.
There are also former software entrepreneurs jumping into biotech such as Isilon co-founder Sujal Patel, who is leading protein analysis company Nautilus Biotechnology, which raised $345 million in June via a SPAC merger.
Proven leadership helps attract capital and the involvement of “marquee” investors, said Freedman. “Good executives, good investors: I think it sort of snowballs,” he said. He added: “We’ll see how long it lasts.”
Leslie Alexandre, CEO of industry group Life Science Washington, is bullish on the Washington biotech scene, with its deepening expertise and powerhouse research institutions including Fred Hutchinson Cancer Research Center and the University of Washington.
“While a few Washington companies may have taken advantage of a wide-open IPO window to come out earlier than expected, I believe much of what we are witnessing reflects the maturation of our local industry,” she said.
The state also had two other biotech companies go public over the past year via mergers, including Nautilus Biotechnology and kidney treatment company Chinook Therapeutics, which went public in October.
Here’s a rundown of the Washington state biotech companies that have gone public since August 2020:
