It’s a gold rush: Scores of small health-care firms are going public through initial public stock offerings (IPOs) again this year — despite the fact that most are losing money, and many haven’t sold anything.

Of 25 health-care companies on a list of promising initial public stock offerings posted by the New York investment bank Brookline Capital Markets in a Nov. 12 report to clients, only three are profitable so far — and 16 had not yet booked any sales.

Locally, the new firms include the radiation-sickness drug developer Galera Therapeutics (based in Malvern), the T-cell immunotherapy developer Cabaletta Bio of Philadelphia, and the eye-disease biopharma drugmaker Oyster Point Pharma of Princeton. Each went public in the last month, while still preparing for their first sales.

(added Dec. 3): What goes up may not stay up for long. Consider PhaseBio Pharmaceuticals Inc. The Malvern- and San Diego-based slow-release heart-drug developer, after raising $85 million from private investors since 2002, went public at a disappointing $5 a share last summer. The stock rose above $13 this past Spring, but has lately traded around $3.25, rising and falling with each incremental report on when its drugs might make it to market. PhaseBio revenues total less than $1 million per quarter, while it is spending nearly $1 million per week.

“Since Spark Therapeutics went public [in 2015] without significant revenues and the share price held up nicely, there’s been a health-care highway that other companies want to drive on," says Mike DiPiano, founder of Radnor-based NewSpring Capital, which has a health-care-focused fund among its portfolios. NewSpring avoids super-hot gene-therapy start-ups — such as Spark — but DiPiano notes that many kinds of health-care start-ups have benefited from investor interest.

Spark, based in Philadelphia, won FDA approval for the first gene therapy for an inherited disease in the U.S., and is developing therapies to fight hemophilia and other diseases. The company has boosted sales since it went public — last month it reported $57 million in revenues year to date — but that’s still less than a quarter of its $248 million in expenses. Despite those daunting numbers, the Swiss drugmaker Roche in February bet that Sparks’ potential is so great, it agreed to buy the smaller firm for $4.3 billion, plus take over its $500 million in cash (corrected). The sale is still pending regulatory approval but has continued to juice investor expectations.

When DiPiano started his firm 20 years ago, it was internet start-ups that were going public without profits or even revenues. That doesn’t happen much anymore for software firms, DiPiano said with a laugh. A lot of the action shifted to bio.

Tela Bio Inc., Malvern, which started trading this month, is among the minority of new health-care stocks that are at least generating revenues when they go public. The company, which grossed $52 million in its IPO, sells OviTex-brand hernia-repair tissue based on sheep stomach materials, made on contract by a factory in New Zealand, where sheep outnumber people by 6-1.

Sales nearly doubled, to more than $1 million a month, during the first half of 2019, compared with a year earlier. But these revenues still covered less than half the costs of paying the company’s 86 employees, plus research and development efforts to apply the company’s technology to plastic reconstructive surgery, according to documents the company filed with the Securities and Exchange Commission before going public. CEO Antony Koblish says investors are betting on higher sales from more products.

Biotech drugmakers like Spark have attracted a lot of attention from investors in the last few years — "but for medical-device companies like ours, the window has started to open up just over the past year or so,” Koblish added. The company was founded in 2012, backed by Philadelphia-based Quaker Partners.

“It’s exciting to see a new generation of public biotech companies in the region,” said Barbara Schilberg, chief executive officer and managing director at Wayne-based BioAdvance, one of three biotech investment firms funded by the Pennsylvania state government in the early 2000s with proceeds from the tobacco-industry lawsuit settlement. Schilberg still hopes this year will mark more biotech IPOs than last year. Investors’ “enthusiasm has grown for new opportunities in those spaces, even if they are early-stage,” she added.

Well-capitalized start-ups buoyed by IPO cash can afford to keep expanding until they generate sales and profits, Schilberg concluded. She welcomed the IPO surge: In the Philadelphia area, “a critical mass of high-growth companies is just what we need to keep the momentum going.”

How long can this go on? Some 22 of the 25 recent health-care IPOs tracked by Brookline since June have gone public at lower-than-expected prices.

“Clearly this is late-bull-market behavior," said James M. Meyer, chief investment officer at Tower Bridge Advisors in Conshohocken, which invests $1.3 billion for clients. “Drug companies, and biotechs in particular, are valued on the Street based on their pipelines" of very specialized, future products, he added.

Daniel P. Rodan, an analyst at Tower, counted 66 biotech IPOs last year, and 32 in the first nine months of this year. Last year’s deals raised more, on average, he said.

Start-ups that go public tend to share a few common factors, says Martin Lehr, chief executive at Context Therapeutics in University City and a cheerleader and convener for nascent biotech companies. There are serial CEOs (Galera’s Mel Sorensen and Cabaletta’s Steve Nichtberger have started companies before), hopeful clinical data — and strong venture capital funding.

Going public saddles small companies with reporting and compliance rules, and impatient shareholders. But it’s worth it to start-ups that can draw investor attention, said Christopher P. Molineaux, president of Life Sciences Pennsylvania, the industry advocacy group. “Companies with no profits and even with no earnings are pursuing this funding route because of the high cost of drug development, particularly as a potential therapeutic reaches the very expensive Phase 3 of development,” he told me. “Investors are responding because of the greater probability of success and, in some cases, accelerated approval channels at the FDA that may lead to faster entry into the market.”

When the stock market finally slows, will small public companies evolve and diversify, or collapse like yesterday’s dot.coms?

“We are building this company to be a great stand-alone business,” said Tela Bio’s Koblish. “This IPO was not an exit for us. It was a robust financing that gave us the opportunity to take great products and data," and boost clients, sales, and profits.

“Philadelphia has a very good ecosystem for life-science companies,” added Koblish, a Connecticut native. The large drugmakers in the suburbs ensure there are a lot of research and sales people to hire. And, while relatively low-cost, “it’s close to D.C., where the FDA is, and it’s close to New York, where there’s an ocean of capital.”