Biotech stocks are once again hot bills on Wall Street and this brings a wave of high risk , high-yielding initial public offerings
Small and medium-sized biotech companies are enjoying a tremendous year. The S & P Biotechnology Select Industry Index has hit record highs, up about 15% since the beginning of the year.
<img src = "https://images.thestar.com/yeDQEKnlZYngBv0B5YaWpN2eV2U=/1086×724/smart/filters:cb(1532199781663)/https://www.thestar.com/content/dam/thestar/business/ technology / 2018/07/18 / biotech-ipo-boom-comes-with-side-effects / biotech.jpg "srcset =" https://images.thestar.com/yeDQEKnlZYngBv0B5YaWpN2eV2U=/1086×724/smart/filters:cb ( 1532199781663) /https://www.thestar.com/content/dam/thestar/business/technology/2018/07/18/biotech-ipo-boom-comes-with-side-effects/biotech.jpg 1086w, https: //images.thestar.com/x4bz9P1xHgll8vgKIHJ3yz3to84=/968×645/smart/filters:cb(1532199781663)/https://www.thestar.com/content/dam/thestar/business/technology/2018/07/18/biotech- ipo-boom-comes-with-side-effects / biotech.jpg 968w, https://images.thestar.com/L1DiOVnycxV2RkKZn1YVWzEgae8=/850×567/smart/filters: cb (1532199781663) /https://www.thestar.com /content/dam/thestar/business/technology/2018/07/18/biotech-ipo-boom-comes-with-side-effects/biotech.jpg 850w, https: //images.thestar.com/Z7AmOwtCFlEVnZcbdLlnKIoagNI=/6 50×433 / smart / filters: cb (1,532,199,781,663) /https://www.thestar.com/content/dam/thestar/business/technology/2018/07/18/biotech-ipo-boom-comes-with-side-effects /biotech.jpg 650w, https://images.thestar.com/NHi5cmcc6tTwJcuQcxWHFWnyCsw=/605×403/smart/filters: cb (1532199781663) /https://www.thestar.com/content/dam/thestar/business/technology/ 2018/07/18 / biotech-ipo-boom-comes-with-side-effects / biotech.jpg 605w, https://images.thestar.com/gZhQsCkThGiULww2y6aoHbkoKFc=/480×320/smart/filters: cb (1532199781663) / https : //www.thestar.com/content/dam/thestar/business/technology/2018/07/18/biotech-ipo-boom-comes-with-side-effects/biotech.jpg 480w, https: // images. thestar.com/Ibk_Q1WLOXS1FGXi3zCc7hqELCs=/400×267/smart/filters:cb(1532199781663)/https://www.thestar.com/content/dam/thestar/business/technology/2018/07/18/biotech-ipo-boom- comes-with-side-effects / biotech.jpg 400w, https://images.thestar.com/5entLIuOEjLmvEs2j39rNDSzOpk=/320×213/smart/filters: cb (1532199781663) /https://www.thestar.com/content/dam / thestar / b usiness / technology / 2018/07/18 / biotech-ipo-boom-comes-with-side-effects / biotech.jpg 320w "alt =" Up to 17 July, 32 IPOs have been listed on the stock exchange. United States for a combined value of about $ 3.4 billion. Until July 17, 32 biotechnology IPOs have been listed so far this year in the United States for a combined value of about $ 3.4 billion, according to Dealogic data. ( Gilles Sabrie / Bloomberg News )
Start-up companies benefit from this market power and investors reward them. Kidney Disease Specialist Tricida, who has no drug on the market yet, raised about $ 250 million in an offer earlier this month, and is valued at more than $ 1 billion. . The shares of Solid Biosciences, a gene therapy start-up that raised about $ 125 million through an IPO in January, have more than doubled this year.
On Wednesday, 34 biotechnology IPOs have listed so far this year in the United States. According to Dealogic data, the value of a transaction amounts to about $ 3.7 billion. Another handful of companies, such as the startup in oncology Replimune, should be made public by the end of the month. That figure would surpbad 37 new IPOs last year, which brought in about $ 3.8 billion.
The bursting of activity should cause concern, as IPO emissions tend to regroup later.
The euphoria of 2014 when 84 companies became public and raised $ 7.8 billion. And at the time, the biotechnology market peaked in the summer of 2015.
There is good reason to believe that the biotechnology market will not come down anytime soon, even with more than a few. 39, IPOs. This is because major drug companies, eager to boost growth rates, are willing to pay for relatively rare quality biotechnologies. This maintains strong mergers and acquisitions, and, in turn, gives Biotech stocks a strong supply across the sector.
Of course, too many new biotechnologies are likely to overwhelm their potential buyers. This risk is not yet in the foreground, but investors would do well not to neglect it completely
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