PIPES, option licensing and reverse mergers are starting to look pretty again.
It's difficult to read the tea leaves when it comes to 2011 Biotech and Life Science financing trends, according to the Life Sciences Group at www.headwatersmb.com
An analysis determined mixed messages regarding financing, M&A and partnering opportunities in the broad healthcare markets going into 2011.
While an IPO window opened during the first quarter of 2010, that window has closed for the foreseeable future. However, there has been a recent uptick in follow-on and PIPE (private investment in public equity) offerings over the last couple of months.
Although venture investment in life sciences was less in 3Q2010 than the previous quarter, VC investment in the sector in 2010 is on pace to exceed the total amount invested in 2009. Nonetheless, the VC markets remain tight. Many companies are seeking alternative or supplemental sources of capital such as the 2,923 life science companies that recently received grants under the new Qualifying Therapeutic Discovery Project (created by the Affordable Care Act).
Other mixed messages in 2010: Partnering transaction volume is down, but mean transaction size is up. M&A activity is up, but mean transaction size is down.
It is a unique transaction environment for life science companies. We believe both the private and IPO markets will remain tight but follow-on and PIPE activity might pick up. We also believe M&A and partnering activity stay consistent or pick up slightly.
Here's a link to the Life Sciences Partnering Commentary.