Taking a biotech company public requires extensive preparation and fortitude, according to three CEOs who recently completed their own IPO journeys. Speaking at a BIO CEO panel, the leaders of Septerna, Upstream Bio and Actuate Therapeutics shared insights from their experiences navigating the challenging public markets.
The biotech IPO landscape has shown modest signs of recovery, with 24 companies going public in 2024, slightly up from previous years. However, the path remains difficult, with most 2024 IPO companies now trading below their initial offering prices.
Jeffrey Finer, CEO of Septerna, which raised $288 million in its October IPO, emphasized the importance of early preparation. Despite having a strong cash position in mid-2024, Septerna began planning its IPO well in advance, conducting a full financial audit in late 2023 and assembling its banking team about four and a half months before going public.
Timing emerged as a crucial factor. Advisers suggested the optimal window for an 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 also preferred seeing data releases within a similar timeframe post-IPO.
Legal experts recommend companies begin preparations approximately one year before their planned IPO. This includes reviewing existing agreements, ensuring compliance with SEC regulations, and establishing regular business practices that won’t conflict with “gun-jumping” rules during the IPO process.
The workload is substantial, requiring extensive documentation to support investment claims. Companies typically engage multiple investment banks to cultivate investor interest, with Upstream meeting approximately 120 potential backers during their process.
Team composition proves critical for managing the complex IPO journey. Many companies choose to work with familiar legal firms and banks, leveraging existing relationships. Actuate Therapeutics CEO Daniel Schmitt highlighted the value of working with their longtime corporate counsel who already knew their documentation.
Creating a compelling narrative is essential for attracting investors. Upstream Bio successfully positioned their drug verekitug by emphasizing its relationship to an already approved medication and its potential applications across multiple diseases. This strategy helped them secure $255 million in their October IPO.
The transition to public markets brings significant changes in operations and communications. Finer noted how Septerna had to adjust from regular conversations with their 16 early investors to more restricted communications post-IPO. Companies must also ensure they meet exchange requirements, including board composition rules and having key positions filled.
Managing market volatility and maintaining investor relations becomes a crucial focus after going public. Companies need robust IR and HR departments to handle increased scrutiny and questions from
stakeholders about stock performance.
While the biotech IPO market shows signs of improvement, success requires careful planning, strong team building, and clear
communication of value propositions. Companies must balance insider participation with attracting new investors while preparing for the operational changes that come with public company status. As these CEOs demonstrated, successfully taking a biotech public demands both strategic foresight and operational discipline.