Which Regions Are Churning Out the Most Biotech IPOs?

11/4/13Follow @xconomy

If you’ve got ambitions to start and build a biotech company that may someday go public, where is the best place to make it happen? Which regional clusters provide the most fertile places where people, scientific ideas, technology, and money come together to build NASDAQ-worthy biotech companies?

This is just one more way of looking at the strength and vitality of regional biotech clusters. A few weeks ago, readers may recall I ranked regional biotech clusters based on how many major league companies they have. That analysis looked at how many life sciences companies are headquartered in each region and have more than $100 million in cash and short-term investments to pursue their ideas.

That’s one way of looking at how much strength a region has. But it left out a whole bunch of small up-and-coming life sciences companies that every region must also have if it’s going to be a vibrant place. Given that 45 life sciences companies have raised $3.9 billion combined from IPOs this year, there are enough data points to look at where all the IPO-caliber companies are coming from. I also sought to measure the relative strength of the companies by looking at how much cash these companies vacuumed up in their IPOs and brought back to their respective communities.

This analysis came out a little differently than the other one. Boston—that place with all the giddy Red Sox fans—came out No. 1 in the ranking of major league life sciences companies, and triumphed again in this analysis. Boston is home to eight of the 45 (18 percent) of the life sciences IPOs this year, and its companies have raised the most money—about $770 million. But all you dejected Yankees fans can cheer up—the New York/northern New Jersey region has pumped out just as many IPOs as Boston this year, with eight. San Diego comes in third with six IPOs completed so far this year, and San Francisco is next with five. It should be noted, however, that San Francisco’s IPOs have collectively raised a lot more money than San Diego’s—$441 million in gross proceeds went to the Bay Area, compared with $362 million for San Diego.

Some readers may wonder about New York/New Jersey, and whether it’s fair to lump those two states together in an integrated region. I have gotten mixed feedback on this. If you break New York and New Jersey into distinctly different clusters, then Boston is the undisputed champion of biotech IPO activity. New York by itself has only produced two biotech IPOs this year and New Jersey has given birth to six.

Still, I’m going to list New York and New Jersey together, because companies there are constantly zipping between the center of investment money in Manhattan, and scientific talent that’s networked between both places.

“There are political borders, but the biotech geography is much different than the political borders,” says Nathan Tinker, executive director of the New York Biotech Association. “If you look at how the companies here interact, it all feeds off New York City. It’s where the money is. Even if the company is headquartered across the river in New Jersey, they come to New York to do their banking, to get employees, to get technology from the big medical schools. It’s all very integrated.”

Interestingly, only five of the 45 biotech IPOs this year come from outside the U.S. Three are from Israel, and two are from Europe. I’ll try to remember that the next time I hear someone say China is about to overtake the U.S. in biotech.

The Tar Heels out there who read Xconomy also shouldn’t get too excited when they review the chart below. North Carolina’s biotech hub is benefitting in this analysis by the inclusion of Quintiles (NYSE: Q), a true outlier. Quintiles raised almost $1 billion in its IPO in May. It’s a contract research firm that’s profitable, has been around a long time, and has nothing in common with any other scrappy little biotech on the list, other than the fact it’s in the life sciences industry. If you remove Quintiles, North Carolina looks more like a middle-of-the-pack producer of IPO-caliber life sciences companies, which seems more realistic.

One last point. There are 15 additional biotech companies that are in line to go public, according to my count of filings with the Securities and Exchange Commission. San Diego and Philadelphia have the most in line, with four apiece, while San Francisco is next with three. Interestingly, Boston only has one more company visible in the queue (Karyopharm Therapeutics) so it could be that Boston’s edge may diminish between now and the end of the year.

With that, here is where the biotech IPO class of 2013 hails from. As always, I welcome your comments and questions at the end of this story, at ltimmerman@xconomy.com or on Twitter at @ldtimmerman.

Region Company Name Ticker Gross IPO Proceeds
 
Boston Foundation Medicine FMI $121.9m
Agios Pharmaceuticals AGIO $121.2
Bluebird Bio BLUE $116.1
Acceleron Pharma XLRN $106.2
Epizyme EPZM $88.7
Tetraphase Pharmaceuticals TTPH $80.6
Bind Therapeutics BIND $70.5
Enanta Pharmaceuticals ENTA $64.4
TOTAL $769.6m
 
New York/New Jersey Ophthotech OPHT $192.3m
PTC Therapeutics PTCT $144.4
Aerie Pharmaceuticals AERI $77.3
Stemline Therapeutics STML $69.0
Omthera Pharmaceuticals acquired $64.0
Regado Biosciences RGDO $46.7
Cancer Genetics CGIX $46
Adma Biologics ADMA $28.5
TOTAL $668.2m 
San Diego Ambit Biosciences AMBI $83m
Receptos RCPT $72.8
Conatus Pharmaceuticals CNAT $66.0
Sophiris Bio SPSH $65.0
Fate Therapeutics FATE $46.0
Evoke Pharma EVOK $29.0
TOTAL $361.8m 
 
San Francisco Bay Area Portola Pharmaceuticals PTLA $140.4m
OncoMed Pharmaceuticals OMED $93.8
Five Prime Therapeutics FPRX $71.8
KaloBios Pharmaceuticals KBIO $70.0
Veracyte VCYT $65.0
TOTAL $441m 
North Carolina Quintiles Q $947.4m
Chimerix CMRX $117.9
Liposcience LPDX $51.8
Heat Biologics HTBX $27.0
TOTAL $1,144m 
 
Israel  Enzymotec ENZY $71.0m
Kamada KMDA $51.6
Alcobra ADHD $38.0
TOTAL $160.6m 
 
Maryland/Washington D.C.  Intrexon XON $184m
Macrogenics MGNX $92
TOTAL $276m 
 
Pennsylvania/Philly Onconova Therapeutics ONTX $89.1m
 
Texas LDR Medical LDRH $86.3m
 
The Netherlands Prosensa RNA $78.0m
 
Michigan Esperion Therapeutics ESPR $70.0m
Seattle  NanoString Technologies NSTG $54.0m
Wisconsin Cellular Dynamics ICEL $46.2m
Arizona Insys Therapeutics INSY $36.8m
Kansas Aratana Therapeutics PETX $35m
United Kingdom GW Pharmaceuticals GWPH $32.6m

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  • caroline hoedemaker

    interesting article – one could also argue that Onconova is a PA/NJ company – as currently one of its two facilities is in NJ

    • KG18

      yeah – what NYC is to north and central Jersey…. Philadelphia is to southern Jersey.

  • Rob Kent

    The weekly Boston Booster article, how much do they pay?

  • Paul Hastings

    Hi Luke, and thank you for your leadership here…I think the ONLY people that care which “cluster” is which or whether NJ and new York are together or Boston is the victor are people who run our state affiliates….most of us operating folks are happy, happy , happy to see the VOLUME of IPO’s in THIS COUNTRY and OUR NATIONAL LEADERSHIP in innovation. I LOVE that NY/NJ are having a resurgence…I am on the board of a company that spans manufacturing in San diego and HQ in NJ: Pacira…amazing company…do I care WHERE it is located? No. I care about the team, the mega performance and the “can-do” attitude that starts from the CEO, Dave Stack and permeates through the entire company. If you come to a BIO board meeting, there is LIMITED to NO one-upsmanship or national competition. All these states you mention in your article have the forsight to make really great people want to stay and innovate. A HUGE bunch of companies on the Emerging Companies Section Board of BIO just went, or about to go public…thats a capital formation accomplishment for OUR INDUSTRY worth celebrating. I have lived in New Jersey, Boston, Boulder, Amsterdam, Luebeck, Vancouver, and San Francisco. Congratulations to all friends there that can break through the trials and tribulations of setting up, raising capital and ultimately going public. Cheers, fellow Biotech folks, wherever you are..we are all connected…..

  • Jonathan

    Thanks Luke for this detailed summary. It would also be interesting to see a column for the VC’s that participated in these deals.

  • http://www.xconomy.com/ Luke Timmerman

    Thanks Paul for the comment. I agree that’s it’s great that quite a few good biotech companies have been able to go public this year. It provides returns for their investors, provides resources these companies need to pursue their missions. I don’t really see this as a competition between states or regions, but more of a way for each region to see how well it is doing at creating the environment for these companies to take root and grow. Some regions are doing well. Maybe there’s something the various local economic development folks can learn from that.

  • Michael Kaiser

    Thank you very much, Luke. This is great news for Boston and as I explained in LinkedIn to my contacts: “Now I understand why I am getting so many calls from overseas :-)”.
    Michael Kaiser
    Global BioPharma Alliances
    Boston Area

  • cvrichard

    Hi, Luke. Time to update the table with 2 additional IPOs from San Diego? :)

    Richard

  • http://www.xconomy.com/ Luke Timmerman

    Richard — not quite time to update. Tandem Diabetes Care and Celladon have set ranges for their IPOs, but haven’t yet actually priced. And I probably won’t update because then I’d need to do it for every other region on the list, too. But it’s good to see that San Diego will probably get at least 8 new life science IPOs this year.

    Luke

  • cvrichard

    > But it’s good to see that San Diego will probably get at least 8 new life science IPOs this year.

    Absolute.

    But again, unlike the others in the top 4, no one in San Diego has cracked that $100M mark yet. We’ll see if Tandem will do it.

    Richard

  • J

    “hail from” may be a bit strong. Two of your NY/NJ companies launched and grew in NC (Regado and Aerie), and I believe still have sites there. Epizyme (public) and Trevena (filed) were spun out of UNC and Duke respectively to management teams in Boston and Philly but had their first labs in NC. Trevena and Aerie were in the same building in RTP.

    So “where to start” and “where to grow” may be different. Stand proud Tar Heels (and Blue Devils).