NewHavenBIZ

n e w h a v e n b i z . c o m | J u l y 2 0 2 2 | n e w h a v e n B I Z 23 F O C U S : A c c o u n t i n g By Liese Klein "T he IPO market right now is more or less dead." at's a notable statement coming from John Houston of Arvinas, a New Haven bioscience standout whose initial public of- fering in 2018 made headlines with a $120 million valuation. Speaking at the Yale Innovation Summit in May, Houston went on to caution startup executives facing an uncertain market for any kind of capital raise in the current downturn. "It's a tough environment," Houston said. "Being an entrepre- neur and spinning out a company right now may be very difficult in the private setting. I do worry that some companies will find them- selves in positions where they may go to the wall towards the end of the year." Houston's ray of hope? Companies under stress may "find innovative ways to partner, which I think could be the more exciting way forward." Multimillion-dollar public offerings have punc- tuated the steady growth of New Haven's bioscience Notable New Haven company IPOs, SPAC deals Arvinas: .......................................................$120M, 2018 BioXcel Therapeutics: ..................................$60M, 2018 Trevi Therapeutics: .......................................$55M, 2019 Butterfly Network: ....................................... $1.5B, 2020 Rallybio: ........................................................$93M, 2021 IsoPlexis: .....................................................$111M, 2021 Sema4: ............................................................ $2B, 2021 Quantum-Si: ............................................... $1.46B, 2001 Hyperfine: ....................................................$580M, 2021 Source: New Haven Biz Research IPO, SPAC slowdown may crimp New Haven biotech growth sector in the past several years. Some other examples: BioXcel erapeutics' $60 million IPO in 2018; Trevi erapeutics's $55 million IPO in 2019; Rallybio's $93 million IPO in summer 2021; and IsoPlexis' $111 million IPO in October 2021. On deck for going public this year was oncology startup Cybrexa erapeutics, although the company has not made any recent statements relating to an IPO and did not reply to a request for comment by publication time. Cybrexa did announce it would be presenting at two investor conferences in June. Most recently, SPAC deals — in which a startup merges with a "blank-check" company to go public — have also brought area bioscience startups into the headlines: Genomics-testing provider Sema4, with operations in Stamford and Branford, went public in a SPAC deal in mid-2021 valued at $2 billion. ree med-tech companies founded by prolific Guilford entrepreneur Jonathan Rothberg also de- buted publicly using SPACs deals: Butterfly Network in November 2020 in a deal worth $1.5 billion; Quan- tum-Si in February 2021 in a $1.46 billion deal; and Hyperfine in July 2021 in a $580 million deal. Now both IPO and SPAC markets have slowed to a crawl nationwide due in part to higher interest rates and the specter of an impending recession. Aer a record-breaking 1,035 IPOs on the U.S. stock market in 2022, there were only 122 as of June 23, a 77.5% drop compared to the same period last year, according to data tracker Stock Analysis. SPAC deals have almost completely evaporated due to both the economic downturn and increased scruti- ny by the U.S. Securities and Exchange Commission. New SPAC listings plunged an estimated 94% in the second quarter of this year compared to the second quarter of 2021, according to Bloomberg Law, and the total value of the deals fell by 98%. Although experts at Yale's conference assured aspiring public companies that there was still plenty of "dry powder" — or venture capital funders seeking investments — in the market, the concern was appar- PHOTO | CONTRIBUTED John Houston Continued on page 24 Accounting firm FML's Frank Milone (second from left) advises a client. Milone said emerging companies must sharpen up their management teams and marketing to investors amid a turbulent time for publicly-traded growth companies. PHOTO | CONTRIBUTED

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