Reuters: IPOX® Analyst Lukas Muehlbauer on Biotech Firms Turning to Alternative IPO Paths During U.S. Government Shutdown
In a recent Reuters Explainer journalist Manya Saini discussed companies navigating the ongoing U.S. government shutdown are exploring unconventional paths to keep their IPO plans on track. With the U.S. Securities and Exchange Commission (SEC) halting IPO reviews as the shutdown enters its second week, some issuers are turning to the “20-day registration rule”, which allows them to declare their own registrations effective without formal SEC approval.
The piece highlights that while this provision provides a workaround, it also introduces additional risks due to the absence of SEC oversight. Legal and financial experts warn that such filings may face greater scrutiny from investors.
IPOX® Research Associate Lukas Muehlbauer noted:
“Biotech companies are prime candidates for this unconventional but valid way to go public during a shutdown as their high cash-burn rates often create an urgent need for funding.”
Additional points shared with Reuters provide broader context for this market trend. Muehlbauer explained that the current market climate is particularly favorable for IPOs, especially in the biotech sector, motivating firms like MapLight to capitalize on this opportunity despite regulatory hurdles:
“The current market has an excellent climate for IPOs, particularly for biotech firms, and MapLight wants to use this window of opportunity. The primary risk is that the offering price is locked in for 20 days, which eliminates the flexibility to adjust to investor demand.”
He also noted that MapLight’s preparedness and timing could help it gain an advantage once the SEC reopens:
“MapLight has been filing drafts since last year, so it will have cleared most SEC comments. Since the SEC is facing a backlog once the shutdown resolves, MapLight is taking this bet to get ahead of the queue during this receptive market.”
Citing past examples for comparison, he noted:
“We saw a similar playbook during the 2019 shutdown when Gossamer Bio went for the same route but ultimately priced in the usual way once the government reopened, so this might still happen here as well.”
Read the full article by Manya Saini on Reuters: Explainer: How companies are steering IPO plans amid US government shutdown
