April 23, 2025

Should Every Public Biotech Have an ATM Facility, When Should One Be Put in Place, and Which Banks Are the Top ATM Managers?

Yes, every public biotech should have an ATM facility.

Until they have a drug approved, biotechs are typically in a continuous cycle of fundraising as they progress their drug candidates further and further through development.

Once a biotech is listed on the stock market, however, its financing options increase (relative to when they were private), and for the first time include traditional follow-on financings, PIPE financings, convertible notes and at-the-market (ATM) facilities.

ATMs – which are now commonplace and more or less expected to be put in place at a company’s first opportunity – differ from other financing options because they enable biotechs to raise money at their prevailing stock price (rather than at a discount). In terms of banking fees, they are also typically cheaper.

Since a prerequisite for having an ATM facility is being shelf-eligible, let’s start by discussing what a shelf filing is and how it facilitates having an ATM.  

Shelf (S-3) filings.

To IPO, a privately-owned biotech must make an S-1 filing with the SEC. This registration statement is required to be comprehensive in nature because the public markets are considered to be otherwise unfamiliar with the company and the investment risk it represents.

An S-1 filing contains a great deal of detail regarding a biotech’s financials, strategy, development pipeline, assets, patents, and risks, so that investors can use it to make an informed decision on whether or not to participate in an IPO.

Once a biotech has been public for a year however (assuming among other things that it has made all of its required SEC filings in a timely manner and met all of its debt and dividend obligations during that time), a public biotech is free to file an S-3 registration statement, otherwise known as a shelf filing.

A shelf filing allows a biotech to register a public offering of securities with the SEC, but without immediately selling them. This therefore gives the company the flexibility to issue the securities at any time over the next three years – or possibly to issue none at all.

The name “shelf filing” comes from the notion that these securities are sitting “on the shelf,” ready for the biotech to take down and issue, in whole or in part, at any time.

Allocating part of a shelf to an ATM.

When a biotech files a shelf registration, it typically allocates a portion of the prospective securities to be issued via an ATM facility.

For smaller biotechs (with market capitalizations of less than c. $1 billion) the ATMs put in place tend to approximate about one third of the total shelf size (e.g. $100 million of $300 million, say). For larger biotechs, their ATM is instead sized relative to the company’s market capitalization.

Advantages of ATM facilities over traditional follow-ons:

They are cheaper: The leading ATM managers typically charge a fee of between 2-3% on funds raised, versus the 7% banks take at IPO, and the ~6% the same banks typically charge for a follow-on.

Your new stock is not issued at a discount: ATMs issue shares at your stock’s market price, compared to traditional follow-ons which typically price at a discount.

Delayed visibility: Under SEC rules, ATM usage is only required to be disclosed in the company’s subsequent financial filing (10-Q or 10-K).

No need for a catalyst/milestone: While most follow-ons typically take place after a biotech has hit a major milestone (Phase 2 or 3 data, an FDA approval, etc.), ATMs can be utilized at any time and can even be used in the run up to a blinded data event, as a hedge against a potentially negative outcome.

ATMs can be used in principally two ways:

• Reverse inquiry: On a number of occasions my public clients have concluded a successful investor meeting and been asked, “Do you have an ATM in place and who manages it?” What typically happens next is that the institution then calls my client’s ATM manager to ask if the biotech would be amenable to a $5-$50 million reverse inquiry. Subject to approval by the issuer (and potentially its board or pricing/finance committee) the fund can then obtain its required position, bypassing what might otherwise be a lack of liquidity in the secondary market. Just as importantly, my client raises $5-$50 million at its prevailing share price, and with an associated banking fee of just 2-3%. Depending on their size, reverse inquiries can also be the start (think anchor order) of a larger financing, if that is in line with the biotech’s longer-term plans.

• By issuing stock piecemeal into the trading market: This “drip-feed” of stock into the market (without the buyers being aware that they are buying new rather than existing shares) is what originally gave ATMs a bad name. Existing investors bemoaned the “dilution” and “lack of transparency” associated with ATMs, forgetting that if their company required more capital, using their ATM is arguably the least expensive way of doing so. However, that was a long time ago and such sentiment was always rarer in biotech, where there was and is an acceptance of the ongoing need to raise capital. Also, ATMs don’t have to be used in a vacuum; ATM usage is often best utilized to take advantage of increased trading volume around a company’s general news flow.   

When should a biotech put an ATM in place?

The short answer here is: At the first opportunity a company gets. This is typically around the one-year anniversary of being a public company and coincides with when a biotech becomes shelf eligible.

Putting an ATM in place at this time is generally considered good housekeeping and there is no associated signal that a biotech plans to actually raise money in the short term. Doing so at any other time, however, could raise questions and be seen by the market as a sign you are looking to raise capital imminently.

Who are the leading ATM managers?

The table below shows the leading ATM managers in the just-over-five-year period from 2020 to the date this blog was written.

The rankings should surprise no one, since there has been little movement among the Top 3 managers in recent years.

When asked by my clients who they should consider for their ATM manager, I tell them to choose between Jefferies, Cantor Fitzgerald and TD Securities (Cowen).

H.C. Wainwright might also appear to be in the running, but note that although it won the third highest number of ATM manager roles during this period, the average size of those facilities was materially lower than the other top managers listed.

2020 – 2025’ YTD ATM league table:

Bank	# ATM Manager Roles Won	Total Size ($ million)	Average Facility Size ($ million)
Jefferies LLC	404	48,058.5	119.0
Cantor Fitzgerald & Co.	240	25,077.1	104.5
H.C. Wainwright & Co. LLC	239	10,070.4	42.1
TD Securities	235	30,359.1	129.2
Leerink Partners LLC	150	19,476.2	129.8
B. Riley Securities Inc.	86	13,469.0	156.6
Piper Sandler	55	5,686.7	103.4
Jones Trading Institutional Services LLC	55	2,409.8	43.8
AGP/Alliance Global Partners Corp	54	2,718.1	50.3
Oppenheimer & Co. Inc.	52	3,098.2	59.6
Canaccord Genuity Corp	46	2,629.5	57.2

Source: Dealogic as of March 17, 2025.

How are ATM managers paid?

The top ATM managers typically charge 2-3% in fees. This is higher than some of the smaller institutions listed who might charge as low as 1%, but it comes with more fringe benefits (the potential for research coverage, healthcare investor conference invitations, etc.), not to mention arguably better execution.

Larger ATM facilities will sometimes have two or more managers – with non-trivial rules governing who does the work and how each bank gets paid. In biotech, however, it’s typical for ATMs to have just one manager, though some of the larger facilities have two.  

Will I get equity coverage from my ATM manager?

The short answer is: You might. But in light of the lower fees that ATM managers charge (versus other types of financing), banks are likely to take a holistic view of their relationship with you before committing to initiating coverage. Certainly, however, the fees generated by their management of your ATM facility are taken into account.