Biotech IPOs offer investors a shot at exceptional returns but are often tricky for non-biochemists, which means most investors, to decipher.
So we reviewed 2018’s biotech, asking a basic question: are they developing innovative approaches to disease or merely tweaking existing drugs? Innovation beat modest improvements.
The innovative biotechs averaged a first-day pop of 18%, and an average IPO return of 28%. Five of the nine trade above the IPO price. Innovative therapies often target large markets (cancer, inflammation, Alzheimer's) and can command premium pricing. Innovative therapies are also more likely to be acquired, based on M&A in the past year. Lilly's acquisition of ARMO Biosciences (ARMO) drove it to be the best performer.
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