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'Home inspections' for life sciences companies going public before clinical proof-of-concept
Anton Bespalov1, Rob Miller2, Christoph H Emmerich1
1PAASP, Am Aukopf 14/1, Heidelberg 69118, Germany.
None:
Teaser: Most biotech companies go public before demonstrating clinical proof-of-concept with their lead asset. Because publicly available information about such preclinical assets is typically limited, we propose a procedure to improve the efficiency of assigning market value. For the period from 2010 to 2021, we observed a phenomenon of life sciences companies conducting IPOs without any assets having demonstrated clinical proof-ofconcept (POC). Ideally, this area of investment is targeted by investors with the knowledge and resources to assess the probability of success of such early-stage programs based upon adequately planned and performed due diligence. Our analysis of this trend calls for the establishment of a standardized "Home Inspection" procedure that would better inform public equity investors buying into such pre-POC companies about inherent uncertainties that few may be aware of and even fewer equipped to assess.
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