Biotech Continues to Raise Money for Development
The stock market and overall economy are still depreciated; but, this sector is holding up better as there are signs that
drug companies and biotechs seem to be recession resistant.
Regulatory constraints are still the event driver (with about 23 major decisions due in the next few months) of this sector as many biotechs are still struggling to stay alive. One important factor is increasing merger activity; another reason to like healthcare smaller cap stocks as larger drug firms “should” be looking to acquire biotechs to augment their pipelines and diminishing patent protection.
In August, there were:
- 2 – IPO’s ($46.3 M) completed
- 9 – follow-on offerings ($774.43 M)
- 27 – assorted financings ($127 M) including:
- 9 – private placements,
- 6 – registered direct placements,
- 1 – rights offerings,
- 1 – secured loan agreements,
- 2 – committed capital agreements,
- 2 – multiple revolving credit lines,
- 1 – equity drawdown,
- 2 – private unit placements,
- 2 – convertible bridges and debentures,
- 1 – associated company investment and
- 3 – new IPOs being filed.
The Bottom Line: Is that expectations are so low; they can’t help but be exceeded. Thus, the summer doldrums, especially the month of August were … not that “bad”. However, dilution issues affect current pricing and shareholdings when these companies issue new shares and warrants. I still believe that investor sentiment is a bit stronger but fear of a sell-off and lower volumes based on September’s historical activity still override this market.
