In Biotech, Everyones Going Public. Whats Your Excuse?
Summary
It’s now permissible to speak more freely with potential investors, to “test the waters,” as the provision is known, before making the commitment to bare secrets in public documents.These so-called crossover investments are a hallmark of this boom, with hedge and mutual funds like Deerfield Management, Adage Capital Partners, Fidelity, T. Rowe Price, and many others showing up in private financings all the time.As my colleague Ben Fidler reported in May, Boston-based Gelesis, working on an unusual weight-loss product, pulled back from its IPO attempt, citing market turbulence.Back in May, CEO Yishai Zohar—whose wife Daphne runs PureTech, Gelesis’s creator nine years ago and still its top investor, as of earlier this year—downplayed the import of backing away: “Given our strong cash position and clinical studies underway, our board has been weighing the relative benefits of being a public company at this time.” What Zohar called a strong cash position—a phrase he repeated when I contacted him this week—was a $22 million financing round that arrived in April, and perhaps in the nick of time.At the time of the IPO postponement, the company was digesting a 128-person, three-month study with middling weight-loss results, and it was in the midst of a 168-person, six-month trial that won’t reveal its data until the first half of 2016.