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 successful IPOs require extensive preparation, often beginning a year or more before going public.
Jeffrey Finer, CEO of Septerna, which raised $288 million in its October IPO, described the process as extremely demanding. His company began laying groundwork in late 2023 with a comprehensive financial audit, followed by selecting banking partners roughly four and a half months before the offering.
The timing of an IPO proves crucial, according to industry veterans. For Septerna, advisers identified an optimal window between initiating human trials and being 6-12 months away from data readouts. Rand Sutherland, CEO of Upstream Bio, noted similar investor preferences regarding the timing of clinical results following their public debut.
Legal expert Gabriela Morales-Rivera of Goodwin recommends companies begin preparations approximately one year ahead, reviewing existing agreements and ensuring compliance with SEC regulations. She warned that inadequate preparation could extend the IPO timeline by six months or more.
The process demands extensive documentation to support investment claims. “We needed to back every single thing, every piece of data, every claim we had,” Finer noted, explaining that supporting materials nearly matched the effort required for the main IPO documentation.
Building the right team proves essential for managing this workload. Companies often select legal firms and banks with established relationships. Actuate Therapeutics CEO Daniel Schmitt highlighted the value of working with their longtime corporate counsel who already knew their documentation. Multiple banks typically participate, with companies seeking complementary strengths in analysis, banking operations, and market expertise.
Developing a clear, compelling narrative is crucial for attracting investors. Upstream Bio, which raised $255 million in its October IPO, leveraged its drug verekitug’s connection to an already-approved treatment while emphasizing its broader potential applications. The company conducted approximately 120 investor meetings during the process.
Valuation strategy requires careful consideration. Finer noted that Septerna intentionally maintained moderate valuations in earlier funding rounds to preserve flexibility for the IPO. The company ultimately priced shares at $18, exceeding their initial $15-17 range.
The transition to public status brings significant operational changes. Companies must adapt to stricter communication protocols and expanded investor relations responsibilities. Finer described how his previous open dialogue with early investors had to shift to ensure equal information access for all shareholders.
Market volatility remains a persistent concern for newly public biotechs. Of the 24 biotech companies that completed IPOs last year, only two currently trade above their offering prices. This challenging environment makes thorough preparation and strategic planning even more critical for success.
The executives emphasized that while going public provides crucial funding for drug development, companies must be prepared for the demands and restrictions that come with public status. This includes meeting exchange requirements, managing broader stakeholder
communications, and handling market pressures that can affect both company operations and employee morale.