Pharmaceutics and Drug Design Commons^™

Comparing Long-Term Value Creation After Biotech And Non-Biotech Ipos, 1997–2016, Ekaterina Galkina Cleary, Laura M. Mcnamee, Skyler De Boer, Jeremy Holden, Liam Fitzgerald, Fred D. Ledley

Natural & Applied Sciences Faculty Publications

We compared the financial performance of 319 BIOTECH companies focused on developing therapeutics with IPOs from 1997–2016, to that of paired, non-biotech CONTROL companies with concurrent IPO dates. BIOTECH companies had a distinctly different financial structure with high R&D expense, little revenue, and negative profits (losses), but a similar duration of listing on public markets and frequency of acquisitions. Through 2016, BIOTECH and CONTROL companies had equivalent growth in market cap and shareholder value (> $100 billion), but BIOTECH companies had lower net value creation ($93 billion vs $411 billion). Both cohorts exhibited a high-risk/high reward pattern of return, with …