Cutting-edge biotech startups and more established privately-funded but publicly held hopefuls are far and away the winners of the race for deep-pocket investors since New Year’s. I thought it might be useful to examine the historical data since the beginning of the year–a period fraught with volatility and uncertainty. After all, one in four IPOs this year has been a biotech, and the group has an average return of a jaw-dropping 49%.
Here are the 10 issues priced so far in 2018 and their performance since offer date.
1) BioXcel Therapeutics Inc., which is developing new uses of drugs to treat neurological disorders and cancer, raised $60 million today, 3/8/2018, by offering 5.5 million shares at $11, the low end of the range of $11 to $13. BioXcel lists on the Nasdaq under the symbol “BTAI.” Barclays, UBS Investment Bank and BMO Capital Markets acted as Lead Managers on the deal. Shares closed Thursday (March 8, 2018) up 0.27%.
2) Biofrontera AG, which sells treatments for skin conditions caused by sun damage, raised $12 million on 2/14/2018 by offering 1.2 million ADSs at $9.88. Biofrontera lists on the Nasdaq under the symbol “BFRA.” The Benchmark Company acted as a lead manager on the deal. Listed on the Frankfurt Stock Exchange (B8F), Biofrontera plans to raise an additional $17 million in Germany in a preemptive-rights offering to existing shareholders. Shares are up 57% at $15.50.
3) Motus GI Holdings Inc., which is developing a medical device to assist with intraprocedural colonoscopy cleaning, raised $18 million on 2/14/2018 by offering 3.5 million shares at $5, the low end of the range of $5 to $7. At pricing, the company commands a fully diluted market value of $79 million. Existing shareholders purchased $7.5 million (43% of deal size) on the IPO. Motus GI Holdings lists on the Nasdaq under the symbol “MOTS.” Piper Jaffray and Oppenheimer & Co. acted as lead managers on the deal. Shares are off 1% at $4.94.
4) Evolus Inc., which is preparing to launch a biosimilar version of Botox, raised $60 million on 2/8/2018 by offering 5 million shares at $12, the low end of the range of $12 to $14. Evolus lists on the Nasdaq under the symbol “EOLS.” Cantor Fitzgerald and Mizuho Securities acted as lead managers on the deal. Shares are down 10% at $10.76.
5) Sol-Gel Technologies Ltd., which is developing topical acne creams that deliver treatment via microcapsules, raised $75 million on 2/1/2018 by offering 6.25 million shares at $12, the midpoint of the $11 to $13 range. It had previously planned to offer 5 million shares at the same range. Sol-Gel lists on the Nasdaq under the symbol “SLGL.” Jefferies and BMO Capital Markets acted as lead managers on the deal. Shares are down 5% at $11.36.
6) ARMO BioSciences Inc., a late-stage immunotherapy 2.0 biotech targeting advanced cancers, raised $128 million on 1/26/2018 by offering 7.5 million shares at $17. It originally planned to offer 6.7 million shares at a price range of $14 to $16. ARMO BioSciences lists on the Nasdaq under the symbol “ARMO.” Jefferies, Leerink Partners and BMO Capital Markets acted as lead managers on the deal. Shares are up 288% at $49.00.
7) resTORbio Inc., which is developing a therapy to boost the immune systems of the very elderly, raised $85 million on 1/26/2018 by offering 5.7 million shares at $15, within the range of $14 to $16. resTORbio lists on the Nasdaq under the symbol “TORC.” BofA Merrill Lynch, Leerink Partners and Evercore ISI acted as lead managers on the deal. Shares are up 8% at $16.18.
8) Solid Biosciences Inc., which is developing a gene therapy to treat Duchenne muscular dystrophy (DMD), raised $124.8 million on 1/26/2018 by offering 7.8 million shares at $16, below the revised range of $18 to $19. Insiders purchased $40 million of the IPO (32% of deal size). At pricing, the company commands a fully diluted market value of $531 million. Solid Biosciences lists on the Nasdaq under the symbol “SLDB.” JPMorgan, Goldman Sachs and Leerink Partners acted as lead managers on the deal. Shares are up 72% at $27.58.
9) Eyenovia Inc., which is developing micro-formulations of common eye therapies, raised $27 million on 1/25/2018 by offering 2.7 million shares at $10, the low end of the range of $10 to $12. Eyenovia lists on the Nasdaq under the symbol “EYEN.” Ladenburg Thalmann and Roth Capital acted as lead managers on the deal. Shares are off 8% at $9.19.
10) Menlo Therapeutics Inc., which is developing treatments for moderate to severe skin itch and chronic cough, raised $119 million on 1/25/2018 by offering 7 million shares at $17, the high end of the range of $16 to $17. Menlo Therapeutics lists on the Nasdaq under the symbol “MNLO.” Jefferies, Piper Jaffray and Guggenheim Securities acted as lead managers on the deal. Shares are up 88% at $32.00.
So the gold medal goes to cancer immunotherapy devloper ARMO BioSciences–by far the year’s best-performing IPO–up 288% from its offer price. Rounding out the podium is chronic itch biotech Menlo Therapeutics (+88%) and gene-therapy biotech Solid Biosciences (+72%).
Biotechs have proved resilient to volatile market conditions, helped by insiders buying on the IPO and valuations that are rooted in lengthy clinical trials. The industry’s worst-performer, Evolus, is down just 10% from its IPO.
Steve's Take: Don’t expect to see a let-up in the crush of successful #Biotech #IPO launches and new SEC filings. There’s a craving out there in the market for the eye-popping 49% average return so far.
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(Preceding historical data generously supplied by IPOScoop.com)
Switching to companies shoving their way into the IPO logjam this week was Next-gen CAR-T biotech Autolus Ltd., registering a Nasdaq IPO after kicking off three Phase 1/2 trials of its CAR-Ts and bringing its private financing take up to $173 million, FierceBiotech reports.
London, UK-based Autolus Ltd. now wants to tap public investors for more cash but details of its plans are scarce. Autolus and two of its publicly traded investors–Arix Bioscience and Syncona–revealed the cell-therapy startup has filed a registration statement with the SEC. But, as the statement itself is confidential, details about Autolus’s operation and fundraising plans remain under wraps for now.
Just a few weeks after signing a big deal with Novartis AG–now confirmed to have included $35 million upfront and almost $1 billion in milestones–Homology Medicines has pushed ahead with plans for a $100 million IPO. A Renaissance Capital report says the gene-editing specialist intends to list under the “FIXX” symbol on the Nasdaq and filed the IPO confidentially on December 22, 2017.
Last November, Novartis signed a five-year deal to allow it to use Bedford, MA-based Homology’s technology to develop new treatments for certain ophthalmic and hemoglobinopathy diseases, without giving further details.
Homology’s IPO prospectus filed with the SEC now reveals that along with the upfront payment and a $15 million investment in its series B round last August, Novartis has pledged up to $20 million in payments when clinical candidates are selected, as well as $960 million in milestones and royalties on any future sales.
And Arcus Biosciences Inc., a clinical-stag e biotech developing cancer immunotherapies, announced terms for its IPO on Monday (March 5, 2018). The Hayward, CA-based company plans to raise $99 million by offering 7.1 million shares at a price range of $13 to $15. At the midpoint of the proposed range, Arcus Biosciences would command a fully diluted market value of $600 million.
Arcus Biosciences was founded in 2015 and booked $1 million in revenue for the 12 months ended December 31, 2017. It plans to list on the NYSE under the symbol “RCUS.” Citi, Goldman Sachs and Leerink Partners are the joint bookrunners on the deal. It is expected to price this upcoming week.
Don’t expect to see a let-up in the crush of successful IPO launches and new SEC filings. There’s a craving out there in the market that notices the eye-popping average return so far of 49% and can’t wait to dive in. Where else in the healthcare sector, or anywhere for that matter, can you that kind of performance?