Eight biotechs swarm into Nasdaq, raising $796 million as the IPO raindance shows no signs of abating. My take on which resemble rational wagers versus blind bets.

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In recent years, biotech IPOs came one, or maybe two, most weeks. But in 2018, things are very different. Last week, a mind boggling eight were priced, simultaneously testing investors’ appetite for risky companies that will reward them either handsomely over the long haul…or not so much.

Bottom line is that the eight are benefiting from a total raise of $796 million, generally pricing shares in the middle of the range–just the latest windfall to help fuel the R&D work of a steady stream of players who have been making the switch to the public markets.

The following numbers are all prior to fees as well as the possible buy-in from underwriters.

Here’s the list of publicly traded newbies:

1) Autolus Therapeutics Ltd., which is developing blood cancer therapies based on highly targeted CAR T-cells, raised $150 million by offering 8.8 million shares at $17, the high end of the $15 to $17 range. The company had planned to offer 7.8 million shares. Existing investors intended to buy up to $60 million on the IPO. London-based Autolus Therapeutics lists on the Nasdaq under the symbol “AUTL.” Goldman Sachs and Jefferies acted as lead managers on the deal.

The company aims to “reprogramme” the body’s T-cells so that they can recognize and destroy cancerous cells that otherwise are able to evade the  immune system. Therefore, the treatment would come from the body’s own immune system rather than high side effect chemotherapies, radiation treatments or surgeries.

Autolus’s therapies introduce Chimeric Antigen Receptors (CARs) into the body’s existing T cells. These embed in a T cell and act as an antibody to recognize the cancerous cell. This directs the T cell to destroy the cancerous cells within the body.

Thumbs Up: I like the fact that Autolus’s AUTO-1 is currently in two Phase 1 studies for two different types of cancers. And Autolus has pulled the trigger on a licensing agreement to acquire global rights from UCL Business PLC to develop and commercialize a novel CAR-T cell therapy targeting B cell malignancies. There’s real momentum here.

Shares closed late Tuesday (June 26) up 62% from their IPO price at $27.56.

2) electroCore Inc., which is commercializing a handheld nerve stimulation device for treating migraines, raised $78 million by offering 5.2 million shares at $15, within the range of $14 to $16. Basking Ridge, NJ-based electroCore lists on the Nasdaq under the symbol “ECOR.” Evercore ISI, Cantor Fitzgerald and JMP Securities acted as lead managers on the deal. Shares closed up 25% to $18.70.

Thumbs Up: I like this company because it already has developed an approved product–the gammaCore–a small handheld stimulator which allows the vagus nerve to not only be stimulated through the skin, but to be stimulated discreetly, by the patient themselves.

Electrocore is in clinical trials for patients’ treatment both in the areas of neurology and rheumatology. Gammacore is already commercially available and FDA approved to treat migraines and cluster headaches, but electrocore hopes to expand its uses to treat other types of headaches and rheumatoid arthritis.

Shares closed the week up 32% to $19.85.

3) Magenta Therapeutics Inc. raised $100 million from the sale of exactly 6,666,667 at $15 a share. Under GlaxoSmithKline veteran Jason Gardner, Cambridge, MA-based Magenta has been moving fast, stockpiling venture cash and charging ahead with a compound in-licensed from Novartis. The money should pay for a pivotal trial. The company lists on the Nasdaq under the symbol “MGTA.” J.P. Morgan, Goldman Sachs and Cowen acted as lead managers on the deal.

Thumbs Stuck: I like Magenta but can’t yet determine whether it’s a rationale bet or a pure gamble. Firstly, the company is in the bone-marrow transplant business. Yes, transplants can treat and can be the only cure for blood cancers, bone marrow diseases (like anemia) and other immune system and genetic disorders (such as sickle cell disease). Because of this, they are hugely valuable as a life-saving technique. But they are currently a very high risk, complicated procedure.

Magenta seeks to not only make bone marrow transplants a safer, more viable option, but they hope to expand the number of diseases that can be treated with bone marrow transplants. One of its programs, MGTA-456, is already in clinical trials. MGTA-456 increases the number of healthy stem cells that can be obtained from umbilical cord blood. Umbilical cord blood is often used in bone marrow transplants for patients who don’t have a suitable bone marrow donor.

In addition to MGTA-456, Magenta has six other bone-marrow-transplant-focused programs in either the discovery or pre-clinical stages of development.

Shares closed off 7% at $14.01.

4) Avrobio Inc. came in just below Magenta, with a $99.7 million raise to boast about, setting the initial price at $19. The Cambridge, MA-based biotech has touted an early success for Fabry disease, where their gene therapy AVR-RD-01 helped spur a patient’s plasma a-Gal A activity into the normal range. That helped with a $60 million crossover round for the Atlas-launched biotech earlier this year. Avrobio lists on the Nasdaq under the symbol “AVRO.” Underwriter were led by Morgan Stanley, Cowen and Wells Fargo Securities.

Thumbs Up: I like this company because it’s on a roll with four drugs currently in its pipeline. The furthest along, AVR-RD-01, is a gene therapy for Fabry Disease currently undergoing Phase 1 trials. In Fabry disease, the lysosomal enzyme alpha-galactosidase is missing, which can lead to a range of pain, kidney, heart and skin symptoms.

The kidney and heart symptoms often shorten the lifespan of those with Fabry disease. With AVR-RD-01, Avrobio modifies a patient’s own stem cells to correctly express the gene that helps the body create the missing enzyme. Avrobio uses a similar method for all of their current drug candidates.

Avrobio plans to begin phase 2 trials for AVR-RD-01 in mid-2018 and initiate Phase 1 trials for two more drug candidates within the next 12 months.

Shares closed the week up 60% at $30.37.

5) Aptinyx Inc. hit the ground running at $16 a share, raising $102.4 million. The company was spun out of the $1.7 billion buyout of Naurex–with $560 million in cash–which Allergan CEO Brent Saunders wanted for its lead NMDA drug aimed at major depression. That drug is now dubbed rapastinel, which won a breakthrough drug designation at the FDA. Evanston, IL-based Aptinyx lists on the Nasdaq under the symbol “APTX.” Underwriters were led by J.P. Morgan, Cowen, Leerink Partners, BMO Capital Markets.

Thumbs Up: I like just about any clinical-stage biotech focusing on neurologic disorders. Specifically, Aptinyx is addressing diseases in which there are abnormalities synaptic plasticity, or the process by which nerve cells learn how to respond to stimuli. And Aptinyx has a pipeline chock full of promise. Its lead drug candidate, NYX 2925, is in Phase 2 trials for both Painful Diabetic Peripheral Neuropathy and Fibromyalgia. Both of these indications are characterized by intense chronic pain.

NYX-2925 modifies the nervous system’s reaction to the stimuli which cause these pain, leading to relief for these patients.

Aptinyx also has drugs in its pipeline for PTSD and Parkinson’s Disease Cognitive Impairment.

Shares closed up 26% at $20.13.

6) Kezar Life Sciences Inc. upsized its offering slightly, going with 5 million shares at $16 each for $75 million. South San Francisco-based Kezar is working on a pipeline of autoimmune drugs. Spun out of Amgen with small molecules from the plate of the former Onyx Pharmaceuticals, Kezar’s lead product is KZR-616. The drug is a selective immunoproteasome inhibitor that’s about to be tested in a Phase 1b/2 trial in lupus and lupus nephritis. Kezar lists on the Nasdaq under the symbol “KZR.” Underwriters were led by J.P. Morgan, Cowen, Leerink Partners and BMO Capital Markets.

Thumbs Sideways: Although I like the disease field Kezar specializes in, talk about complicated treatment approaches! For its lead drug candidate, KZR-616, Kezar focuses on blocking on the immunoproteasome. Proteasomes control protein degradation. Immunoproteasomes are proteasomes specifically found within immune cells. In autoimmune diseases, immune cells attack healthy body cells, so by inhibiting immunoproteasomes, Kezar can slow or halt these diseases.

KZR-616 is currently beginning Phase 2 trials in lupus and lupus nephritis. Lupus is an autoimmune disease in which the body’s own immune cells attack the healthy tissue of many parts of the body. KZR-616 is also poised to begin Phase 1b/2 clinical trials for four other autoimmune diseases, several of which have orphan disease status.

Shares closed up 10% at $17.54.

7) Xeris Pharmaceuticals Inc. raised $85.5 million at $15 per share. Kezar and Xeris filed their IPOs together, and made the leap jointly. Chicago-based Xeris has plans to launch its glucagon pen for diabetics. Their glucagon pipeline includes post-bariatric hypoglycemia and congenital hyperinsulinism. Biotech Xeris lists on the Nasdaq under the symbol “XERS.” Underwriters were led by Jefferies, Cowen, Wells Fargo, and William Blair.

Thumbs Up: I like Xeris because I can wrap my head around its product offerings and it’s well along the path to learning whether the regulators find it safe and effective. In a nutshell, Xeris uses its XeriSol and XeriJect non-aqueous formulation technology platforms in order to create new drug suspensions that do not rely on being mixed with water. These drugs can be sold as auto-injectors, pre-filled syringes and vials, multi-dose pens or infusion pumps.

Thus far, many of Xeris’ later-stage trials focus on diabetes and blood-sugar related drugs. It’s Glucagon rescue pen, used for severe hypoglycemia or low blood sugar, is in Phase 3b trials. Xeris believes that the “G-Pen” can save lives, because it is much faster to administer during a life-threatening emergency than current glucagon treatments.

In fact, Xeris filed for IPO in order to fund the G-Pen’s NDA submission. So potential Xeris investors probably won’t have to wait very long for a commercial product to become available.

Shares closed up 29% at $19.34.

8) Eidos Therapeutics Inc.’s offering came to $106.3 million. The biotech priced at $17 and then watched the share price soar, rising past the $23 mark. The San Francisco-based company is a subsidiary of BridgeBio, a privately held biotech focused on genetically targeted therapies for a number of different types of disease.

Eidos focuses on diseases caused by transthyretin amyloidosis. Transthyretin (TTR) is a protein in the blood responsible for transporting thyroxine (a thyroid hormone primarily affecting metabolism) and retinol (also known as Vitamin A1, which has a key role in a number of body functions).

With transthyretin amyloidosis, TTR proteins become unstable andaccumulate as amyloids in the heart or peripheral nerves. These buildups can lead to cardiomyopathy (heart disease) or polyneuropathy (a progressive, fatal disease which affects ability to move, feel, and digest food as well as cardiovascular function).

Thumbs Up: I like Eidos because there is currently no treatment for TTR polyneuropathy, and TTR cardiomyopathy is treated only with liver and heart transplants. Eidos has developed AG10, which binds to TTR in the blood and stabilizes it, stopping the shape changes that cause TTR to build up.

AG10 entered Phase 1 Clinical Trials in 2017, and results have confirmed its stabilizing properties, its safety and its effectiveness in all three major forms of these diseases. Phase 2 started in April of this year, and Phase 3 is slated to start in early 2019. Lots to look forward to.

Eidos lists on the Nasdaq under the symbol “EIDX.” Underwriters were led by J.P. Morgan, and BofA Merrill Lynch Co. Shares closed up 19% at $20.20.

Steve’s Take:

This is what a scorching, record-setting, high-risk biotech IPO sprint resembles.

The numbers are staggering: there will be 31 biotech companies that joined the IPO craze this half, more than the number that did so in the entire 2012, Seeking Alpha notes. iShares Nasdaq Biotechnology ETF is exhibiting a steady rise over the last one month. However, segment fans know in their hearts that such booms are usually followed by harsh adjustments.

Bottom Line:

Eight companies raised $796 million last week; four are out to raise $520 million-plus this week and five filed on Friday for another $547-million plus. Total: $1.86 billion. In one sliver of time. Not surprisingly, this comes after an eruption of venture investing that has added billions of dollars to biotechs in a matter of months.

Steve's Take: #biotech #IPOs may top 60 this year. But can the market bear it? Only highly risk-tolerant portfolios should find out. Click To Tweet

Although anything can (and usually does) happen, right now, biotech is on track to beat 2017’s entire years-worth of IPOs, but in half the time. And theoretically it could set us on a path to 2014 levels, when pent-up demand following a lengthy drought and eager acceptance unleashed what SA terms “a wild 66-IPO romp.”

Analysts are pondering just who are these companies and investors hitting the jackpot? How does this or that track record compare to your projections and why? Can the market bear 60-plus biotech IPOs this year? And, of course, which companies will make it all the way through the clinical process to FDA approval and ultimately the world-wide marketplace? Not many.

Lots to ponder and fortunes to be made, but only for the highly risk-tolerant portfolios.

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