The process of taking a biotech company public requires extensive preparation and fortitude, according to three CEOs who recently navigated successful IPOs in a challenging market environment. Speaking at a recent BIO CEO panel, the leaders of Septerna, Upstream Bio, and Actuate Therapeutics shared insights from their experiences transitioning their companies to public markets.
Jeffrey Finer, CEO of Septerna, which raised $288 million in its October IPO, emphasized the intense demands of the process. His company began laying groundwork nearly a year in advance, conducting thorough financial audits and carefully assembling a team of advisers in late 2023, roughly four months before going public.
Timing emerged as a critical factor across all three companies’ experiences. Advisers suggested the optimal window for IPO falls between initiating human trials and being 6-12 months away from producing results. This timing consideration resonated with Rand Sutherland, CEO of Upstream Bio, whose investors sought similar timing for data releases following their public debut.
Legal experts recommend companies begin preparations approximately one year before a planned IPO. Gabriela Morales-Rivera, partner at Goodwin, advised reviewing existing partnerships and licensing agreements early, as they may contain provisions requiring disclosure during the IPO process. She also highlighted the importance of navigating SEC “gun-jumping” rules, which can restrict certain company communications unless previously established as regular business practice.
The executive teams emphasized the importance of assembling the right group of advisers, particularly investment banks that can effectively cultivate investor interest. Upstream Bio conducted approximately 120 investor meetings during their process, which culminated in a $255 million IPO in October. The company priced shares at $17 each, selling 15 million shares in an upsized offering.
Both Finer and Sutherland noted challenges in obtaining precise guidance on potential price ranges for their offerings. Septerna ultimately priced above its initial $15-17 range at $18 per share, bolstered by support from key anchor investors. The companies also stressed the importance of careful valuation planning, with Finer noting they intentionally maintained conservative valuations in earlier funding rounds to preserve flexibility for the IPO.
The transition to public markets brings significant operational changes. CEOs must adapt to stricter communication protocols with investors and comply with exchange requirements around board composition and corporate governance. Finer described having to limit previously routine conversations with early investors to ensure fair disclosure to all shareholders.
Market conditions remain challenging for biotech IPOs, though there are signs of improvement. While 24 biotech companies went public in the previous year, marking an increase from 2022 and 2023, most currently trade below their offering prices. Only two of last year’s biotech IPOs maintain share prices above their initial levels.
The executives emphasized that success requires extensive advance planning, a compelling investment narrative, and resilience through a demanding process. Companies must carefully balance existing investor relationships with the need to diversify their shareholder base, while simultaneously preparing for the heightened scrutiny and regulatory requirements of public markets. As Actuate Therapeutics’ CEO Daniel Schmitt noted, finding the right partners who will remain committed throughout the process is essential to navigating the complex transition successfully.