The Role of Pre-IPO Financial Indicators and Intermediaries in Aftermarket Performance and Survival in the US Biopharmaceutical Market

This paper examines factors affecting the stock price, net proceeds, and subsequent survival of biopharmaceutical firms that have gone public between 1996 and 2007 in the USA. We find that the financial condition of biopharmaceutical firms going public has deteriorated. The results also indicate that the financial condition of the firm prior to its going public and the intermediaries associated with the firm and initial public offering have little effect on first-day price increases. The findings, however, indicate that several of these financial indicators, and having prestigious underwriters, do have a significant effect on the amount of net proceeds received by the firm.