Taking a biotech company public requires extensive preparation and resilience, according to three CEOs who recently completed initial public offerings (IPOs) in a challenging market environment.
Speaking at a recent BIO CEO panel, executives from Septerna, Upstream Bio and Actuate Therapeutics shared insights from their experiences navigating the complex IPO process. The biotech market has shown modest signs of recovery, with 24 IPOs completed last year, though most newly public companies are trading below their offering prices.
Jeffrey Finer, CEO of Septerna, which raised $288 million in its October IPO, emphasized the importance of early preparation. His company began planning nearly a year 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, with advisers suggesting companies go public after beginning human trials but before major data readouts. For Upstream Bio, which secured $255 million in its October IPO, potential investors wanted to see results within 6-12 months post-offering.
The process demands extensive documentation and due diligence. Companies must thoroughly support every claim and data point, with backup materials often rivaling the main regulatory filings in volume. Legal experts recommend reviewing existing agreements and partnerships a year ahead to identify any provisions requiring disclosure.
Team composition plays a vital role in successful offerings. The CEOs stressed selecting trusted partners, particularly law firms and investment banks with existing relationships. Upstream’s CEO Rand Sutherland noted his company met with approximately 120 potential investors during the process, highlighting the intensive nature of fundraising efforts.
Creating a compelling narrative proved essential. Upstream leveraged its drug candidate’s connection to an already-approved therapy while emphasizing near-term objectives over longer-term possibilities. The strategy helped secure an upsized offering at $17 per share.
Valuation strategy requires careful consideration. Septerna
intentionally maintained moderate valuations in earlier funding rounds to preserve flexibility for the IPO. The company ultimately priced above its initial range at $18 per share, balancing existing investor interest with the goal of attracting new long-term investors.
The transition to public markets brings significant operational changes. Companies must adapt to stricter communication protocols and manage relationships with a broader investor base. Septerna’s Finer noted how his previously open dialogue with early investors had to shift to ensure equal information access for all shareholders.
Daniel Schmitt, CEO of Actuate Therapeutics, which raised $22 million in its August IPO, emphasized the importance of assembling a dedicated team prepared for the demanding process. The executives agreed that successful IPOs require extensive groundwork, from regulatory compliance to investor relations infrastructure.
Technical requirements can present unexpected challenges. Septerna encountered a last-minute hurdle when learning about Nasdaq’s chief financial officer requirement. Board composition rules also demand careful attention, as market volatility has led to larger private company boards that may need restructuring to meet exchange
requirements.
While the biotech IPO market shows signs of improvement, the path to public markets remains complex and resource-intensive. Success requires methodical planning, strong teams, clear communication strategies, and careful attention to both technical requirements and market dynamics.