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Trade-sale exits in different biotech sectors

Nature Biotechnology volume 33, pages 1229–1231 (2015)Cite this article

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To the Editor:

Although in recent years the public markets have been receptive to initial public offerings (IPOs) of private biotech companies, the staple and preferred exit for venture capitalists (VCs) has long been an acquisition by another company (the so-called trade sale)1. Here, we present an analysis of trade-sale returns based on investment and acquisition data of VC-backed companies over the past five years. Our analysis indicates that in the period of study, the initial size of VC investment in companies is relatively constant, irrespective of area of focus; however, companies developing small molecules obtain a higher premium at trade sale (and thus greater multiples on investment) than companies developing other product categories.

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Figure 1: Returns following trade sales of private biotech companies.

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  1. Athena Institute, Vrije Universiteit Amsterdam, Noord-Holland, the Netherlands

    Kenneth Fernald & Eric Claassen

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  1. Kenneth Fernald
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  2. Eric Claassen
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Correspondence to Kenneth Fernald.

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The authors declare no competing financial interests.

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Fernald, K., Claassen, E. Trade-sale exits in different biotech sectors. Nat Biotechnol 33, 1229–1231 (2015). https://doi.org/10.1038/nbt.3304

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