Do Healthy Balance Sheets Boost Biotech IPO Valuations?
This article was originally published in Start Up
Executive Summary
It seems intuitive: the more money a biotech has when it's ready for an IPO, the better its valuation should be. And perhaps, all things being equal, that might be true. But since IPOs represent a highly diverse set of companies, cash does not-by itself-represent an a priori advantage relative to valuation. We took all the recent biotech IPOs-25 total-and compared their cash totals at the end of the quarter immediately preceding their IPOs to the total pre-money valuation at the offering.