Going public is an arduous journey that requires extensive preparation and fortitude, according to three biotech CEOs who recently guided their companies through initial public offerings. Speaking at a BIO CEO panel, the executives shared insights from their experiences navigating the challenging IPO landscape.
Jeffrey Finer of Septerna, Rand Sutherland of Upstream Bio, and Daniel Schmitt of Actuate Therapeutics emphasized that while biotech IPOs showed modest improvement in 2024 with 24 offerings, the path remains complex and demanding. The process requires careful planning, sometimes years in advance, to position companies for success.
The CEOs stressed the importance of timing and proper groundwork. Septerna, which raised $288 million in its October IPO, began preparations in late 2023 with a comprehensive financial audit. The company formed its banking syndicate approximately four and a half months before going public, targeting a window between initiating human trials and expecting initial results.
Team composition proved crucial, with the executives highlighting the value of established relationships with law firms and investment banks. Upstream Bio, which secured $255 million in its October IPO, met with roughly 120 potential investors during the process. The company’s drug verekitug, which targets the same pathway as an approved Amgen/AstraZeneca medication, helped create a compelling investment narrative.
Financial considerations required delicate balance. Septerna deliberately 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, managing demands from existing investors while diversifying its shareholder base.
The transition to public markets brings significant operational changes. Companies must adapt to stricter communication protocols and broader stakeholder management. Finer noted how his previous regular discussions with Septerna’s 16 early investors had to cease, replaced by standardized disclosure practices.
Technical requirements also posed challenges. Septerna encountered an unexpected Nasdaq mandate for a CFO appointment, while board composition rules required careful navigation. According to Gabriela Morales-Rivera, partner at Goodwin law firm, companies should begin preparations approximately one year before their planned IPO to address regulatory requirements and potential obstacles.
The market environment remains uncertain. Among biotechs that went public in 2024, all but two currently trade below their IPO prices. This volatility creates pressure on management teams to maintain employee and investor confidence post-offering.
Documentation demands proved substantial, with companies needing extensive supporting materials for every claim and data point in their SEC filings. The CEOs recommended assembling strong investor relations and human resources departments to manage new public company responsibilities.
The executives emphasized that successful IPOs require clear strategic narratives and focused objectives. Upstream’s Sutherland noted that investors responded positively to concrete near-term goals rather than broader potential opportunities. This tactical approach helped the company secure an upsized offering that sold 15 million shares at $17 each.
Despite the challenges, IPOs remain vital funding sources for biotechnology companies facing substantial research and development costs. The executives advised that careful preparation, strong teams, and realistic expectations are essential for navigating the transition from private to public markets. As Finer concluded, the process demands remarkable resilience, but provides crucial capital for advancing medical innovation.