Drug development in biotechnology companies with IPOs from 1997-2016.

Highlights•Biotech companies with IPOs from 1997–2016 contributed to 367 phase 3 products and 144 approvals.•Small molecules represented 74% of phase 3 products and 78% of approvals.•Reformulations represented 36% of phase 3 products and 46% of approvals.•Approvals included 78 new molecular entities, of which 44% were first-in-class.•Companies had an 78% probability of a product reaching phase 3 and 52% probability of approval.•Public biotech companies contribute to initiating drug development with wide range of technology.AbstractPurposeThis work describes the late-stage product portfolios of the biotechnology companies that completed initial public offerings (IPOs) from 1997 to 2016. We asked whether these emerging companies continue to develop innovative, biologic products and produce the innovation promised by the early biotechnology industry.MethodsWe identified therapeutic products that reached Phase III development from 1997 to 2016, the characteristics of the products, the dates of the initiation of Phase III and product approval, proxy indicators of the innovativeness of each product, and the contribution of each biotechnology company. Companies were characterized by IPO window and clinical status of the most advanced product at IPO. Time from IPO to Phase III or approval, and the estimated probability of a company having a product advance to these milestones, were examined using Kaplan–Meier analysis.FindingsA total of 319 biotechnology companies completed IPOs from 1997 to 2016. These companies contributed to the development of 367 products that progressed to Phase III, and of 144 new drug approvals, through 2016. The estimated probability of a company having a product reach Phase III was 78%, and the estimated probability of a company receiving at least 1 product approval was 52%, with most approvals occurring >5 years after IPO. Small-molecule drugs represented 74% of products reaching Phase III and 78% of approvals. Reformulations represented 36% of Phase III products and 46% of approvals. The estimated probability of product approval was significantly higher for reformulations than new molecular entities (NMEs) and slightly higher for small molecules than biologics. The estimated probability of a company receiving product approval varied significantly by IPO window and was greater for companies with Phase III products at IPO (74%). These companies contributed to the development of 78 NMEs, 44% of which were classified as first in class, initiating development of 69% and contributing to the clinical development of 96%. These products represented 16% of all NMEs and 28% of biologics approved between 1997 and 2016. Seven products achieved per-annum sales of >$1 billion during the study period.ImplicationsThe majority of emerging publicly owned biotechnology companies contribute to products that advance to Phase III development and approval, although these companies are no longer distinctively focused on biologic products.