Allergy therapeutics company Circassia will attempt the biggest biotech listing for years next month, when it plans to raise £175m and join London’s Main Market. Given the sector’s dearth of success stories since 2007 and a string of high profile failures in the 1990s and early 2000s, investors' fingers might still be charred. Yet success for Circassia could prompt others to follow suit.
The planned flotation echoes recent trends in the US, where investor appetite for the sector has sparked a boom in biotech activity. The US market played host to more than 50 life sciences IPOs in 2013 and eight more have listed since the New Year. In 2014 alone, $502m (£303m) has been raised from new healthcare listings.
American positivity has tempted British companies to cross the Atlantic in search of funds. GW Pharmaceuticals (GWP) raised a further £53m on Nasdaq in January after initially listing on the exchange last year and Dutch gene therapy specialist UniQure (US:QURE) followed suit, raising $82m.
But UK investors are not as bold, having had their fingers burned by previous crashes in the sector. Biotech companies have traditionally gone public with early-stage research products in a bid to secure the necessary funding. But this has repeatedly cost shareholders their investments as companies and products have failed to live up to expectations.
"We want to emphasise this is not an early-stage research outfit," says Circassia’s chief executive Steve Harris, "our products are in late-stage trials and the intention is to transform the company into a specialty pharmaceuticals business."
Mr Harris warns ‘there will always be failures’ in the sector but urges investors to recognise a number of private company success stories. Analysts believe that Circassia’s float could inspire more drug development companies to list in Britain. Mr Harris concurs, insisting that a vibrant healthcare market in the UK depends on London ‘appearing open for business’.
