Skye Gould/Business Insider
- The initial-public-offering market is ramping back up after seeing its quietest quarter in three years.
- Healthcare listings are dominating the slate of new companies coming to market this year.
- Jordan Saxe, the Nasdaq’s head of healthcare listings, gave Markets Insider an inside look at what investors should know about the active healthcare IPO market.
- Visit MarketsInsider.com for more stories.
Stop us if you’ve heard this before: investors are expecting a red-hot initial-public-offering market this year.
And lots of healthcare companies.
With 60% of all IPOs priced so far this year coming from the healthcare sector, it’s the most active corner of the IPO market — ahead of technology — according to Renaissance Capital.
Of the 21 names that have debuted since February, 12 of them are in the healthcare space. Among them are relatively tiny, sub-$100 million deals like Anchiano Therapeutics, ShockWave Medical, and Kaleido Biosciences.
And it’s a unique time for new issues. The first-quarter was the slowest quarter in three years by deal count, according to Renaissance data, amid the partial federal government shutdown and the severe market sell-off in late 2018.
But activity is picking back up again, as was expected after a sluggish first few months of the year, and investors are chomping at the bit for newly public names.
Of course, it’s a hectic time for the public exchanges themselves as they compete to list high-profile IPOs. The New York Stock Exchange has historically won larger public offerings, claiming 24 of the 25 all-time-largest US-listed IPOs, according to Renaissance data.
That’s where Jordan Saxe, the Nasdaq’s head of healthcare listings, comes in.
Saxe has advised on over 200 IPOs, and part of his job description is educating venture capital, private equity, and investment firms on liquidity options in the healthcare and biotech space.
Broadly, Saxe said he’s witnessed an increasingly rapid process for biotech and healthcare companies going from private to publicly traded.
"The biggest trend really that’s happening is the speed at which these companies actually come to market," he said in a recent interview at the Nasdaq Marketsite in New York. "There used to be this blueprint where you raised some money, did some lab tests, waited around, raised some more money, did a phase I, did a crossover round, then you’d wait 12 months."
Now a typical path might look something like this: companies will have a "monster" Series A round of funding, then begin a crossover round of funding, and then launch an initial public offering.
"The compression of the timeline is definitely happening, and I think that’s because investors are willing to support those types of opportunities" across the biotech space, he said.
As for the concerning trends in the IPO market that investors should be paying attention to, Saxe pointed to where a company trades relative to the range in which it was initially priced — though he believes the first few days of trading are often "irrelevant" for healthcare and biotech names.
"You look at how the deals price within the range, and the range that the banks set, and then how they actually map back to that on the IPO day. That to me is the real indicator," he said.
"You can look at how much money is being poured into the system," but ultimately, "it’s how the money is being deployed, and then the outcomes that you’re getting for that deployment, that is the real measurement."
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