Advanced Search
MyIDEAS: Login to save this paper or follow this series

Going Public When You Can in Biotechnology

Contents:

Author Info

  • Michael R. Darby
  • Lynne G. Zucker

Abstract

Scientist-entrepreneurs prominent in biotech and other high-technology industries view going public not as a cost-effective source of capital but as a cross between selling a now-proven innovation and winning a lottery. Unlike most empirical IPO analyses confined to those firms that go public, we study substantially all the non-public biotech firms founded up through 1989. The probability that one of these firms goes public in any given year increases with the quality of the firm's science base (use of recombinant DNA technology, number of articles by star scientists as or with firm employees, number of biotech patents), the percentage of eligible firms going public the year the firm was founded as a strategy indicator, recent biotech returns as an indicator of a hot market, and whether or how many rounds of venture capital has been obtained. The same key factors increase the expected proceeds raised from IPOs, but the quality of the firm's science base plays a more dominant role. All firms going public try to look like the next Genentech, but only those with the strong science base necessary for success attract large investments.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.nber.org/papers/w8954.pdf
Download Restriction: no

Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8954.

as in new window
Length:
Date of creation: May 2002
Date of revision:
Publication status: published as Michael R. Darby and Lynne G. Zucker, “Real Effects of Knowledge Capital on Going Public and Market Valuation,” in Naomi Lamoreaux and Kenneth Sokoloff, eds., Financing Innovation in the United States, 1870 to the Present , Cambridge, MA: The MIT Press, 2007. [ISBN 0-262-12289-8, pp. 433-467]
Handle: RePEc:nbr:nberwo:8954

Note: CF PR
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

Related research

Keywords:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Lynne G. Zucker & Michael R. Darby & Jeff S. Armstrong, 2003. "Commercializing knowledge: university science, knowledge capture and firm performance in biotechnology," Proceedings, Federal Reserve Bank of Dallas, Federal Reserve Bank of Dallas, issue Sep, pages 149-170.
  2. Stephan, Paula E & Everhart, Stephen S, 1998. " The Changing Rewards to Science: The Case of Biotechnology," Small Business Economics, Springer, Springer, vol. 10(2), pages 141-51, March.
  3. Aghion, Philippe & Tirole, Jean, 1994. "The Management of Innovation," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 109(4), pages 1185-1209, November.
  4. Zucker, Lynne G & Darby, Michael R & Brewer, Marilynn B, 1998. "Intellectual Human Capital and the Birth of U.S. Biotechnology Enterprises," American Economic Review, American Economic Association, American Economic Association, vol. 88(1), pages 290-306, March.
  5. Lynne G. Zucker & Michael R. Darby & Marilynn B. Brewer, 1994. "Intellectual Capital and the Birth of U.S. Biotechnology Enterprises," NBER Working Papers 4653, National Bureau of Economic Research, Inc.
  6. Zvi Griliches, 1990. "Patent Statistics as Economic Indicators: A Survey," NBER Working Papers 3301, National Bureau of Economic Research, Inc.
  7. Lynne G. Zucker & Michael R. Darby & Maximo Torero, 1997. "Labor Mobility from Academe to Commerce," NBER Working Papers 6050, National Bureau of Economic Research, Inc.
  8. Michael R. Darby & Qiao Liu & Lynne G. Zucker, 1999. "Stakes and Stars: The Effect of Intellectual Human Capital on the Level and Variability of High-Tech Firms' Market Values," NBER Working Papers 7201, National Bureau of Economic Research, Inc.
  9. Zucker, Lynne G & Darby, Michael R & Armstrong, Jeff, 1998. "Geographically Localized Knowledge: Spillovers or Markets?," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 36(1), pages 65-86, January.
  10. Banerjee, Abhijit V, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(3), pages 797-817, August.
  11. repec:fth:harver:1473 is not listed on IDEAS
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. C. Thomas Caskey, 2003. "The convergence of disruptive technologies enabling a new industrial approach to health products," Proceedings, Federal Reserve Bank of Dallas, Federal Reserve Bank of Dallas, issue Sep, pages 77-84.
  2. Malcolm Gillis, 2003. "Harnessing new technologies for the 21st century," Proceedings, Federal Reserve Bank of Dallas, Federal Reserve Bank of Dallas, issue Sep, pages 63-75.
  3. Giot, Pierre & Schwienbacher, Armin, 2007. "IPOs, trade sales and liquidations: Modelling venture capital exits using survival analysis," Journal of Banking & Finance, Elsevier, Elsevier, vol. 31(3), pages 679-702, March.
  4. Hermans, Raine & Kauranen, Ilkka, 2003. "Intellectual Capital and Anticipated Future Sales in Small and Medium-sized Biotechnology Companies," Discussion Papers, The Research Institute of the Finnish Economy 856, The Research Institute of the Finnish Economy.
  5. Cassiman, Bruno & Veugelers, Reinhilde & Zuniga, Pluvia, 2007. "Science linkages and innovation performance: An analysis on CIS-3 firms in Belgium," IESE Research Papers, IESE Business School D/671, IESE Business School.
  6. Lynne G. Zucker & Michael R. Darby & Jeff S. Armstrong, 2003. "Commercializing knowledge: university science, knowledge capture and firm performance in biotechnology," Proceedings, Federal Reserve Bank of Dallas, Federal Reserve Bank of Dallas, issue Sep, pages 149-170.
  7. Timothy F. Howe, 2003. "Financing biotechnology research: a firsthand perspective," Proceedings, Federal Reserve Bank of Dallas, Federal Reserve Bank of Dallas, issue Sep, pages 119-130.
  8. Frank R. Lichtenberg, 2003. "The benefits to society of new drugs: a survey of the econometric evidence," Proceedings, Federal Reserve Bank of Dallas, Federal Reserve Bank of Dallas, issue Sep, pages 43-59.
  9. Michael R. Darby & Lynne G. Zucker, 2002. "Growing by Leaps and Inches: Creative Destruction, Real Cost Reduction, and Inching Up," NBER Working Papers 8947, National Bureau of Economic Research, Inc.
  10. Rothaermel, Frank T. & Thursby, Marie, 2005. "Incubator firm failure or graduation?: The role of university linkages," Research Policy, Elsevier, Elsevier, vol. 34(7), pages 1076-1090, September.
  11. Michael S. Lawlor, 2003. "Biotechnology and government funding: economic motivation and policy models," Proceedings, Federal Reserve Bank of Dallas, Federal Reserve Bank of Dallas, issue Sep, pages 131-146.
  12. Pukthuanthong, Kuntara, 2006. "Underwriter learning about unfamiliar firms: Evidence from the history of biotech IPOS," Journal of Financial Markets, Elsevier, Elsevier, vol. 9(4), pages 366-407, November.
  13. Rebecca S. Eisenberg, 2003. "Reaching through the genome," Proceedings, Federal Reserve Bank of Dallas, Federal Reserve Bank of Dallas, issue Sep, pages 105-115.
  14. Henry G. Grabowski, 2003. "Patents and new product development in the pharmaceutical and biotechnology industries," Proceedings, Federal Reserve Bank of Dallas, Federal Reserve Bank of Dallas, issue Sep, pages 87-104.
  15. John V. Duca & Mine K. Yücel, 2003. "Science and Cents: Exploring the economics of biotechnology: an overview," Proceedings, Federal Reserve Bank of Dallas, Federal Reserve Bank of Dallas, issue Sep, pages 3-10.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:8954. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.