Biotech executives who have recently guided their companies through initial public offerings shared valuable insights about the
challenging journey during a panel at the BIO CEO conference this week. The leaders emphasized that going public requires extensive preparation, sometimes years in advance.
Jeffrey Finer, CEO of Septerna, which raised $288 million in its October IPO, described the process as extremely demanding. Along with CEOs from Upstream Bio and Actuate Therapeutics, he detailed the complex transition from private to public status, noting that most biotechs that went public in 2024 are now trading below their initial offering prices.
The executives highlighted several critical elements for a successful IPO. Timing emerged as crucial – companies need to plan their public debut carefully around key milestones like clinical trial progress. Upstream Bio’s CEO Rand Sutherland noted investors typically want to see data releases within 6-12 months after the IPO.
Legal experts recommend beginning preparations about a year before the intended offering. Gabriela Morales-Rivera, a Goodwin partner, advised companies to review existing agreements and partnerships early, as they may contain provisions requiring disclosure during the IPO process. She also warned about SEC regulations that can restrict certain company communications unless previously established as regular business practice.
Building the right team proved essential. The CEOs emphasized working with trusted legal and banking partners who understand the company’s vision. Septerna and Actuate both maintained relationships with previous corporate counsel through their offerings. Investment bank selection was particularly crucial since these institutions cultivate potential investors. Companies typically engage multiple banks to create complementary strengths.
Developing a compelling narrative emerged as another key factor. Upstream Bio, which raised $255 million in its October IPO, crafted its story around its drug verekitug, which targets the same pathway as an already approved medication but with potential advantages in dosing frequency.
The pricing process involved extensive investor meetings – often 15 per day – to gauge interest and appropriate share price ranges. Finer noted the importance of not overvaluing earlier private funding rounds to maintain flexibility for the IPO. Companies also had to balance existing investor participation with bringing in new institutional investors.
The transition to public status brought significant operational changes. Public company executives face strict limitations on what information they can share and with whom. Finer described having to curtail previously regular communications with early investors to maintain fair disclosure practices.
Regulatory requirements also posed challenges – Septerna was surprised by a last-minute Nasdaq requirement for a CFO. Board composition rules around independence could also complicate listings, particularly for companies with large boards resulting from multiple private funding rounds.
The biotech IPO market showed signs of recovery in 2024 with 24 offerings, an increase from previous years, though executives emphasized the process remains demanding. Successful offerings required careful preparation across multiple dimensions – from financial planning and team building to narrative development and regulatory compliance. While the path to public markets has become somewhat easier, it continues to demand extensive resources and careful navigation of numerous challenges.
The experiences shared by these CEOs highlight how crucial advance planning, strong teams, and clear communication strategies are for biotechs considering public offerings in today’s market environment. Their insights provide valuable guidance for other companies contemplating this significant transition.