Healthy returns: Biotech IPOs kick off in 2024, but the market has yet to fully recover

Angelpe Stocks

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Good morning! After a two-year drought, biotech IPOs have shown signs of recovery in the first three months of 2024.

But it is too early to say that the biotech IPO market has fully recovered.

Biotech IPOs appear to have reached pre-pandemic levels in the first quarter, with nine companies collectively raising more than $1.3 billion. From the database Biopharm Dive. That’s more than three times the roughly $375 million raised by biotech IPOs in the first quarter of 2023.

Here are the companies that went public in the first quarter of 2024, according to the Biopharma Dive database:

1. CG Oncology – 1/24, raised $380 million
2. Arivent Biopharmaceuticals – 1/25, raised $175 million
3. Alto Neuroscience – February 1, raised $129 million
4. Furyk health – February 1, raised $110 million
5. Kevina Therapeutics – 2/7, collected $319 million
6. Telomyl Pharmaceuticals – 2/8, $7M raised
7. A – 2/8, $94M raised
8. Chromocell therapy – 2/15, $7M raised
9. infinite beings – 3/27, raised $100 million

Another company, Kang Kang Therapeutics, Inc. went public on April 4, raising $110 million.

Six of the nine IPOs raised $100 million or more between January and March. Kyverna Therapeutics and CG Oncology raised $319 million and $380 million, respectively. The latter currently trades at a premium above its IPO price.

But the last few biotech companies have been “doing bad business” pricing their IPOs this quarter, biotech expert Mike Peronibeard told CNBC.

For example, gene-editing drug maker Metagenomics was priced below its expected price range in February and has since lost more than half its value. This adds to doubts about the prospects of the biotech IPO market for the rest of the year.

“We started the first quarter with a bang and ended with a bang,” Perrone said.

Those questions are reflected in part in the Fed’s decision to wait, he said, as the Fed cut interest rates more than previously expected after a series of surprisingly high inflation data.

“Much of the enthusiasm for biotech IPOs earlier this year was based on expectations of lower interest rates, and risky assets like biotech with long-term cash flows would do well in a rate-cutting environment,” Perrone said, “but because” inflation remains high and the Fed Delaying rate cuts until the end of the year, and I think that enthusiasm has waned a little bit.”

So, what will the rest of the year look like for biotech IPO activity?

Based on data from the past 10 years, a typical “strong year” looks like about 50 IPOs, says Alda Ural, a market leader in the EY health sciences and wellness Americas industry. The biotech industry has yet to reach this number, with only 10 IPOs scheduled for 2024.

“Things will probably be lower than in a normal year,” Ural said. But he noted that could change.

If the Fed starts cutting interest rates ahead of its late July meeting, Ural said, “IPOs will be different in the second half of the year … and that will certainly take us in a very positive direction.”

He calls it “delayed cautious optimism”.

Mosa image Digital Vision |

In contrast, biotech IPO milestones in 2021, the COVID-19 vaccine and treatment have been largely successful during the pandemic, reviving investor optimism. About 110 biotech companies priced their initial public offerings that year, raising a total of $15 billion.

But the pace began to stagnate in 2022 and went to a snail’s pace in 2023: the biotech industry had 22 and 19 IPOs in these years, respectively.

Perrone said the Fed’s interest rate hikes are an important driver of the economic downturn. He said the poor performance of newly listed companies also played a role, particularly due to the high number of failed clinical trials.

Notably, between 2020 and 2022 most drugmakers are in preclinical or early clinical testing, which Perrone called “an anomaly.”

“I would say the recession was a combination of interest rates starting to rise and the average failure rate of all these young companies,” Perron told CNBC.

The good news this year is that most biotech companies that have priced their IPOs so far have conducted some degree of human testing of their products, reflecting investors’ shift toward safer bets. Perrone called it a “healthier situation” and a more “normal environment”.

But most importantly, we must continue to “monitor the rate” to see how quickly biotech IPO activity progresses, Perrone said. Stay tuned for our coverage in this area.

Please feel free to send any tips, suggestions, story ideas and data to Anika: [email protected].

Hands, tablets and doctors with body holograms, overlays and DNA research for in-app medical innovation. Mobile touch screen for anatomy studies or 3D holographic UX typing in medical staff, nurses and clinics

Jacob Wackerhausen

Last week, I spent an afternoon exploring the virtual universe with Dr. Rohan Zotwani and Dr. John Rubin at Weill Cornell Medical College in New York City.

Jotwani and Rubin serve as anesthesiologists at the medical center and co-director of the Extended Reality Anesthesia Immersion Laboratory (XRAIL).

Anesthesiologists are doctors who specialize in pain management, critical care medicine, and of course anesthesia, the use of drugs to help patients stay comfortable during surgery. This is an important specialty that requires clinicians to use both technical and emotional skills, as working closely with patients in pain can be challenging.

XRAIL was established last year to help anesthetists and trainee anaesthetists improve their skills. Zotwani and Rubin believe technologies such as virtual reality and artificial intelligence can improve medical education and clinical practice within the profession.

For example, the pair designed a series of courses to help doctors learn and practice surgical procedures using 3D models in VR headsets. I observed a class between Jotvani and Dr. Chris Cherenfant, Chief Resident in the Department of Anesthesiology at Weill Cornell.

Before the course started, we all met in a room at the medical center to get to know each other and put on our headsets. The lab primarily uses Meta headphones (we wore the Meta Quest 2), but it’s also exploring uses for Apple’s new Vision Pro headphones. Cherenfant and I had never used a VR headset before, and I think we figured it out pretty quickly.

Even though we’re all in the same place, the headsets can be used remotely, meaning doctors can meet in VR even if they’re in different locations. XRAIL can provide some headsets to residents, and Jotwani says classes of six to eight are usually the best option.

Once I put the headphones on, the experience becomes immersive. When we all joined the meeting, I could see avatars of Jotwani and Cherenphant, as well as a 3D model of a spine in the middle of the room. Cherenfant and I watched Jotwani zoom in and out of the model, picking out individual bones and muscles, rotating them at different angles and drawing them in the air.

I think this model is an effective way to break down complex concepts and gain insight into the nature of anatomy, which is difficult to do with only 2D images from textbooks. It’s easy to see how headphones can be a useful educational tool

“I had this when I was an intern,” Serenfonte told the class.

Technology is far from perfect. Sometimes the headshot gets in the way of the model, blocking my view. If I can see anything from where I’m sitting, Cherenfang often can’t, so it’s hard to spot. Sometimes models suddenly look huge, environments look pixelated or blurry, and we accidentally exit the session for going out of bounds. There are some issues that need to be addressed.

Headphones also can’t replace the sensation of surgery—for example, the feeling of needles piercing your skin. Holding a controller is not the same as using a medical device.

Nevertheless, VR is an easy and relatively inexpensive way for residents to practice surgery as often as needed. Zotwani and Rubin argue that it relies on images, videos and trips to cadaver labs, where information can be few and far between.

XRAIL uses VR to help teach technical skills (like how to perform surgery), while also using AI to teach soft skills (like how to talk and listen to patients). Jotwani and Rubin, who are not engineers by background, have developed about 10 different AI conversational agents with which doctors can practice conversing in real time.

Jotwani said Will Cornell often does this by hiring actors to mimic some of the situations a doctor might face. This is a time-consuming and expensive endeavor, as it can take more than eight hours to train the actors and ensure their portrayal is realistic.

Jotwani added that the actors also followed a script, which meant there was only so much they could do. In contrast, conversational agents allow free discussion.

After Jotwani booted up the computer, I “met” with an agent called CARL, which stands for Conversational Agent Relief Learning in Pain Management. We chatted about the chronic pain Carl experienced, and he detailed his history and life to me, even on the couch of his virtual apartment in New York.

I was impressed—perhaps even a little annoyed—by the natural flow of conversation. CARL is just a computer model, but he seems to have a personality, and I think he’s able to convey feelings like frustration and discomfort believably.

CARL’s responses have a slight delay, maybe one to two seconds, so the conversation isn’t like talking to a real person. I was also told to make sure I used complete sentences when I spoke, so I paid more attention to my words than usual.

But again we clearly see how CARL can be a valuable way for clinicians to engage with patients in a risk-free way. I personally would rather ask an AI agent the wrong question than ask my doctor the wrong question.

“We’re really interested in creating more models like CARL that challenge our residents to think not just about how to pass an exam, but how to tackle real-life situations with complex stories,” Jotwani said.

Jotwani and Rubin are just getting started, and they’re already being asked to speak regularly about their work. Over the next few years, they plan to expand XRAIL’s capabilities and introduce the technology to other organizations.

“I think there’s a lot of opportunity,” Rubin said.

Please feel free to send any tips, suggestions, story ideas and data to Ashley: [email protected].