2024-01-27 06:11:00
CG Oncology (symbol: CGON), which focuses on cancer treatment, was issued at a valuation of $1.15 billion and jumped 96% in its first day. The next day it was realized by 5% and it is still trading at about 90% above the issue price. This success is attributed to two factors – the first factor is the investors’ thirst for new companies and the second is the caution of the underwriters. At this stage, they are putting on the market the companies they know Wall Street likes.
As with every wave of IPOs, it is a process that is getting higher and higher and at its peak there is an unimaginable amount of IPOs and there already the quality of the companies is not as it was at the beginning of the wave. This does not mean that CG Oncology will necessarily succeed in developments and on Wall Street, it means that it is interesting and has a dream. Wall Street buys dreams.
Beyond that, it seems that the market is waiting for good and interesting biotech companies. The biotech market has been declining in the last two years. The SPDR S&P Biotech fund, which tracks small- and mid-cap biotech stocks, is down nearly 50% from its peak in early 2021. Since November, it has jumped 30%.
The fall of the fund by 50% is due to the wave of IPOs of 2021. At that time, over 100 biotech companies were issued and the fund held them when a large part of these companies did not deliver the goods and correspondingly the price on Wall Street fell.
The biotech companies as a whole have not been able to provide a return and this is not just about the last two years. They are issued at a dream price and are unable to satisfy the dream. The success rate is small and the successes are mostly exits. Pharma and biotech companies that lack development acquire mostly large biotech companies that have reached advanced stages and then the prices are also high.
In order for this to succeed this time, two phenomena must occur – relatively reasonable pricing in IPOs and a return to the mode of acquisitions in the pharmaceutical companies. It is certainly reasonable against the background of the great war between them and against the background of the thin pipeline for some companies. To thicken the pipeline they need to acquire and this trend is expected to strengthen.
Comments to the article (0):
Your response has been received and will be published subject to the system policy.
Thanks.
for a new comment
Your response was not sent due to a communication problem, please try again.
Return to comment
#Wall #Street #IPOs #biotech #company #jumped #day