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 transition to becoming public companies. Jeffrey Finer, CEO of Septerna, which raised $288 million in its October IPO, emphasized that the process “is not for the faint of heart.”
The executives highlighted how crucial advance planning is, with preparations ideally beginning up to a year before the intended offering. Septerna conducted a comprehensive financial audit in late 2023 and began assembling its banking team about four and a half months prior to its October 2024 IPO. Timing proved critical, with advisers suggesting the optimal window for going public falls between initiating human trials and being 6-12 months away from generating results.
Building the right team emerged as another vital factor. Companies often leverage existing relationships with law firms and banks they trust. Rand Sutherland, CEO of Upstream Bio, noted the importance of carefully selecting team members given the intense collaboration required. His company met with approximately 120 potential investors before securing its $255 million IPO.
The documentation demands proved particularly challenging. Finer described how every claim and piece of data required extensive supporting materials, creating a workload nearly equal to preparing the main IPO filing document itself. Gabriela Morales-Rivera, partner at law firm Goodwin, advised companies to review existing agreements early, as they may contain provisions requiring disclosure during the IPO process.
Developing a compelling narrative proved essential for attracting investors. Upstream Bio highlighted how its drug candidate verekitug targeted the same pathway as an already approved medication, while offering potential advantages in dosing frequency. The company secured $400 million in private funding before raising an additional $255 million through its public offering.
Pricing strategy emerged as another critical consideration. Companies typically gauge investor interest through “testing the water” meetings about a month into the formal IPO process. Both Finer and Sutherland wished they had received more specific guidance on potential price ranges. Septerna ultimately priced above its initial range at $18 per share, having deliberately maintained conservative valuations in earlier private funding rounds.
The transition to operating as a public company brought significant changes. Finer noted how communication with investors became more restricted, as he could no longer have the same open discussions he previously had with Septerna’s 16 early investors. The executives emphasized the importance of building strong investor relations and human resources capabilities to manage new pressures.
Market volatility remains a persistent challenge, with most biotechs that went public in the previous year currently trading below their IPO prices. However, with 24 biotech IPOs completed during that period – an increase from prior years – there are signs the market may be improving. Still, the path to becoming a public company continues to demand extensive preparation, strategic planning, and readiness to adapt to new operating requirements.