Mass. Biotechs Smashed IPO Records In 2018, But Don't Expect A Repeat In 2019

Massachusetts biotechnology companies enjoyed a banner year in 2018.

Cambridge-based Moderna Therapeutics set an industry record by raising $604 million in its initial public offering.

And Moderna was just the valedictorian in the state's most successful class of biotech IPOs ever. Together, 18 companies raised $2.46 billion –– doubling the state's previous high.

"I mean, the first seven months of 2018 outpaced 2017, in terms of total Massachusetts IPOs," marveled Massachusetts Biotechnology Council President Bob Coughlin.

Though optimistic about the local biotech cluster's long-range trajectory, Coughlin said he expects the public market to "cool off" in 2019. And there are signs that a chill has already set in.

Only three Massachusetts biotechs went public in the final five months of 2018. Moderna was one of them, and its stock price has slumped in early trading.

"Too big of a price, too big of an offering," said analyst David Nierengarten of Wedbush Securities. "From the company's point of view, quite honestly, they raised money at a higher price, so they should be happy about that. However, they should try and continue to make their shareholders happy, and that's going to be a little bit more difficult."

Another local firm, Centrexion Therapeutics, planned to list on the Nasdaq in November but postponed its IPO. The company hasn't set a new target date.

Any biotech that wants to go public needs investors willing to take big risks. If a drug in development doesn't get FDA approval, the company may never be profitable.

On top of the usual biotech risks, the whole stock market has been swinging up and down.

"The market right now is very volatile, and if we look at the markets for biotech over the course of 2018, it's been a pretty wild ride," said Jorge Conde, who leads biotechnology investments at the Silicon Valley venture capital firm Andreessen Horowitz. "The biotech markets tend to be pretty volatile, but if you look over the long arc of time, value has clearly been created."

If that long, upward arc continues, biotech IPOs won't go off a cliff next year. They'll just have a hard time matching the highs of 2018.