Business

Will 2018 set a record for biotech IPOs?

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Fifteen Massachusetts biotechs went public in the first seven months of this year, surpassing the state’s total for all of 2017 and putting the white-hot sector on a potential record-setting pace, according to an industry report.

Led by Rubius Therapeutics, a Cambridge biotech created by Flagship Pioneering that raised about $277 million in an IPO this summer, the 15 companies attracted nearly $1.7 billion in investment through July, said the report, by the Massachusetts Biotechnology Council, a trade group.

That easily surpassed the roughly $1.1 billion raised by the 12 local companies that debuted on Wall Street last year.

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The last time the Massachusetts biotech sector was this robust, in terms of IPOs, was in 2014, when 17 companies went public. An industrywide market downturn the following year sent the sector reeling and cooled investor interest in early-stage drug developers.

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“There’s a very good chance we’re going to have three or four more biotech IPOs from Massachusetts” before the year ends and surpass the 2014 total, said Matt Kennedy, an IPO market strategist for Renaissance Capital LLC of Greenwich, Conn.

Wall Street investors are high on biotechs because of scientific advances in cancer-fighting drugs, efforts by the Food and Drug Administration to speed the approval process for new medicines, and the high rate of return on biotech stocks that went public last year, Kennedy said.

Share prices of biotechs from the 2017 IPO class rose an average of 64 percent nationally, Kennedy said.

Consider Akcea Therapeutics Inc., a Cambridge startup whose experimental drug for a rare inherited metabolic disorder was rejected by the FDA Monday, a stunning setback. Even after the stock lost more than a quarter of its value following that blow, Akcea was still selling Tuesday at three times its IPO price of about $8 a share.

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The number of biotech IPOs is up, but startups that have gone public this year haven’t fared nearly as well as the 2017 class, Kennedy said, with share prices rising an average of 16 percent.

Jason Gardner, CEO of Magenta Therapeutics, a Cambridge startup that raised about $100 million when it went public in June, was unfazed that his company’s stock is down about a dollar from its public offering of $15 a share.

Magenta, he said, is using the money it raised to advance experimental drugs to make bone marrow transplants safer. Like other Massachusetts biotechs, he said, it is benefiting from an influx of executives from big pharma companies who find the science at small drug makers more cutting-edge.

“The talent here in the Boston-Cambridge ecosystem is tremendous,” said Gardner, a veteran of the British drug giant GlaxoSmithKline.

The MassBio report also shows that privately held companies are attracting investments at a sizzling clip. In the first half of 2018, venture capitalists raised about $2.7 billion for private biopharmas, close to the $3.1 billion raised for all of 2017, the MassBio report said.

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The average fund-raising round for biotechs has increased sharply, from $34 million for 2017 to $51 million for the first half of this year. But this year’s average is skewed because of a $500 million fund-raising round by Moderna Therapeutics, a Cambridge clinical stage biotech that is working on messenger RNA drugs and vaccines.

Moderna has raised almost $2 billion in venture capital since its founding in 2010, a jaw-dropping sum for a startup with no new approved products on the market.

In comparison, Cullinan Oncology, another Cambridge biotech, had the largest private fund-raising round in 2017, at $150 million.

Even if Moderna is skewing this year’s average fund-raising round, Abbie Celniker, a partner at the Boston venture capital firm Third Rock Ventures, said there’s no question that privately held companies are harvesting more cash, on average.

“Those mega-rounds, if you will, did not really exist a few years ago,” she said.

Like other “industry snapshots’’ from MassBio, the latest report trumpets the state’s status at, or near, the top of the biotech heap in the United States.

Massachusetts biotechs accounted for 48 percent, or nearly half, of all biotech IPOs in the country last year, according to the report.

This year, Massachusetts IPOs make up nearly 40 percent of the nation’s IPOs.

“The reason we’re in a bull market this long . . . is because the money is following the science,” said Robert Coughlin, the president and chief executive of MassBio. “We’re focusing on breakthrough therapies, therapies that change the course of disease and in some cases cure diseases.”

California narrowly edged out Massachusetts in 2017 as the state with the most biotechnology research and development jobs. California has 39,203 such jobs, while Massachusetts had 35,768, although California has nearly six times the number of residents.

If you have ever doubted how fast biotech is expanding in Massachusetts, consider this: Since 2008, the number of people working in the field has grown 28 percent, from 54,280 in 2008 to 69,941 in 2017.

An earlier version of this story misstated the amount raised for private biopharmas in 2017. It was $3.1 billion.

Jonathan Saltzman can be reached at jsaltzman@globe.com.