Don’t let Mobileye’s (MBLY) big debut fool you–there has been a deterioration in IPO pricing recently.
True, it is a great day for the Israeli company, which priced 35.5 million shares at $25 and opened at $36. Wow.
If you just look at the basic numbers, it doesn’t look bad for IPOs. Of the 176 IPOs that have priced as of yesterday, 105 (60 percent) are trading above their IPO prices, according to Renaissance Capital.
But that masks a significant deterioration.
Since July, there have been 34 IPOs priced. Of those, 12 have been biotechs (35 percent).
Only 20 percent of those biotechs are above their initial price, compared to 44 percent for non-biotech IPOs.
That is a bad trend all-around.
On top of that, several biotech IPOs have been postponed: Lantheus Holdings (LNTH) and Mapi-Pharma (MAPI) were postponed, Micro Balin (MAPI) was put on day-to-day status, and Tobira Therapeutics (TBRA), Zosano Pharma (ZSAN) and Atara Bio (ATRA) were pushed into next week.
So why are so many biotech IPOs still coming? According to Renaissance, many biotechs are getting done because the venture owners are putting new money in at the IPO price to get the company public (and mark up their portfolio investment?) and pharmaceutical acquisitions are keeping up the odds up of a potential winner.