Biotech IPOs have long been viewed with skeptism, especially over the past few years in comparison to the high-flying media darlings in the tech space. But recently a number of the social media phenoms have fallen from grace: Groupon is off 72%, Zynga is off 68%, and Facebook is off 44% as of today. Yet during the past 12–18 months, new biotech IPOs have quietly been putting points on the board with their post-IPO performance. It's now fair to say they have resoundingly outperformed their tech cousins in the public markets.
According to the National Venture Capital Association, 83 venture-backed IPOs occurred since January 2011 through the end of 2Q/12: 15 life science deals and 68 "technology" deals (which include social media, retail, software, etc.). I've taken a crack at examining the relative performance of these biotech versus tech IPOs, and here are the takeaways.
Biotech IPOs have massively outperformed tech in their post-offering trading. Biotech median and average percent change since IPO are +19% and +26% versus tech performance of -9% and +3%, respectively. This is ~2000+ basis points of outperformance—an impressive metric. To put that in perspective, asset managers often talk about beating benchmarks by 300–500 bps as a success, so this type of outperformance is remarkable. . .View Full Article