Since the pandemic put a new spotlight on pharma and healthcare as a star sector for capital markets, more companies in early-stage biotech have been eyeing an IPO. But for many a US listing remains preferable to a deal in their home markets.

According to data from Dealogic, a total of 82 EMEA companies in healthcare and pharma listed in EU markets since 2017, with 33 listing instead in the US in the same period.

However, early-stage companies, especially in the biotech subsector, are skirting local roots and aiming for US listings.

Companies like Olink [NASDAQ:OLK], Exscientia AI [NASDAQ:EXAI], Immunocore [NASDAQ:IMCR] and ADC Therapeutics [NYSE:ADCT] all decided to list in New York between late 2020 and last year, instead of pursuing a European deal, according to Dealogic data.

Other European biotechs who have chosen a Nasdaq listing in the last year include Pharvaris NV [NASDAQ:PHVS], ATAI Life Sciences [NASDAQ:ATAI] and Freeline Therapeutics Holdings [NASDAQ:FRLN].
An ECM banker said that, like tech listings in general, there is a perceived gap around valuation and multiples between the US and Europe.

The partner of an investment firm agreed European exchanges have not been a great place to raise money for biotech stocks.

“One reason is that we don’t have that many specialist fund managers who can assess the risk and are willing to take a position, and second is there’s poor analyst coverage as a result for European names,” he said.
A source close to Olink, which picked New York as its listing venue last year, said: “This was a sizable company and management deemed the US market would be more mature for them and they were right; the share has developed very well. They went to the US and that was right for them.”

Hope for Europe

However, another European ECM banker maintained that investors in Europe are generally better educated on biopharma than they have been in the past and aren’t as risk averse as believed.

Some large European biopharma opted to list in their home markets in previous years, including Swiss company Polypeptide Group AG [SWX:PPGN], Italian firm Philogen [BIT:PHIL] and German business Apontis Pharma [ETR:APPH].
Several European companies have also carried out late-stage fundraisings ahead of potential listings.

Last year, hemodialysis system developer Quanta Dialysis Technologies raised USD 245m in a Series D round led by Glenview Capital and Novo Holdings. A month earlier, healthcare technology and diagnostics firm Binx Health raised USD 104m in a Series E round led by OrbiMed. Meanwhile, Artios Pharma raised a Series C round for USD 153m led by Omega Funds and TCG X in July.

Even without biotech listings, Europe has its share of pharmaceutical IPOs in the pipe.

Schott, a glazing specialist, has selected a syndicate for the IPO of its glass medical packaging business in early 2023, according to previous reports. Stada Arzneimittel has attracted the attention of investment banks seeking to assist with a prospective return of the generic drug producer to the public markets, this news service reported.

Pharmaceutical company Cheplapharm is still keen to press ahead this year despite the market volatility, with a company spokesperson saying investors are well receptive to the business and have provided positive feedback.

There is still hope for Europe.