Valuation Watch: As Biopharma IPOs Return, Does Value?

At least a dozen companies that roughly fit the description of a venture-backed, R&D focused biotech or small pharmaceutical company have gone public since mid-2009. It's a notable figure. For the first time in four years, newly-public life-science firms outnumber private firms acquired by larger pharma during the same IPO window. What's more, those IPOs are generating value that investors haven't seen in nearly a decade. Is it the spark others need to shoot for a public debut?

Despite the discounts, or haircuts, on IPO pricing, IPOs during this recent window have achieved an average 'step-up' multiple of more than 2.7. ( See Exhibit 1.) START-UP calculates a...