The outlook for life sciences IPOs is showing renewed optimism heading into 2025, with market conditions becoming more constructive and regulatory environments potentially more favorable.
Fenwick’s Amanda Rose, Rob Freedman, and Ryan Mitteness recently unpacked these developments—and what innovators can do to prepare to go public in 2025—alongside Morgan Stanley’s Ryuk Byun and Tedd Smith.
Here are the essential insights for life sciences companies considering going public in 2025.
Market conditions are showing promise for 2025. The biotech IPO landscape is becoming increasingly constructive, with renewed optimism following 18 successful IPOs in 2024, including increasing post-Labor Day momentum seen recently when five biotech issuances occurred within just three days. While the market has shown some bifurcation, companies with compelling clinical data in key therapeutic areas are finding receptive audiences. This resurgence suggests a healthier market environment for 2025, particularly for companies with:
Insider support remains crucial. A successful IPO typically requires strong support from existing investors. The ideal allocation typically involves about 60% participation from existing investors and 40% from new investors. This balance helps demonstrate conviction in the company while expanding the shareholder base. Further, being able to begin the roadshow demonstrating at least "1x coverage" from existing investors provides leverage in attracting new investors.
Early preparation is essential. Companies should begin preparation at least 6-12 months before their target IPO date to address several critical components. Key early considerations include:
Financial readiness requires significant lead time. The audit process is often the longest lead-time item, particularly for life sciences companies with lean financial teams. Companies must decide early in the process between going straight to full Public Company Accounting Oversight Board audits or beginning with private company audits (and undertaking a public company “uplift” later as the timing becomes more certain). Working with auditors to reserve resources and establish timelines is crucial, especially for targeted spring submissions when auditors are busy with existing public company clients.
Build a strong public company infrastructure. Successful IPOs require building robust infrastructure well before going public. Key areas include:
The dual-track process offers strategic advantages. Companies should consider pursuing a dual-track process (IPO and M&A) to maximize strategic options. This approach can create leverage in M&A discussions, as potential acquirers may be motivated to act before facing public market premiums. However, the dual-track strategy requires:
For life sciences companies considering an IPO in 2025, now is the time to begin preparations. While market conditions appear promising, success requires careful planning and execution across multiple workstreams. Companies should focus on building strong foundational elements while maintaining flexibility to take advantage of market windows when they arise.
Working with experienced advisors who understand the unique challenges facing life sciences companies is helpful in navigating this complex process. The goal is not just to complete an IPO, but to emerge as a well-prepared public company positioned for long-term success in the capital markets.
Companies that invest in thorough preparation will be better positioned to execute successfully when market conditions align with their strategic objectives. By focusing on these key areas, life sciences companies can optimize their chances of conducting a successful IPO in 2025's promising market environment.
Watch the full webinar and learn more about Fenwick’s capital markets capabilities.