Biotech IPO scene shifts into pre-holiday slow gear, but several former IPOs are soaring with analysts saying Buy, Buy, Buy!

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IPO Sector: US tech IPOs have mostly vanished in the fourth quarter following disappointments from multiple fast-growing, unprofitable unicorns. Healthcare (55% of 4Q IPOs) and Chinese issuers (24%) have hogged IPO deal flow since October. Three recent biotech IPOs have soared since their pricings, while one has watched its share price cut to ribbons.

The top dog is the June, 2019 IPO for Karuna Therapeutics Inc. (KRTX), up 423% from its IPO to $67.63 at close on Friday. In mid-November, Boston, MA-based Karuna disclosed positive results from its Phase 2 trial for schizophrenia drug KarXT, causing the stock to initially soar 601% over two days before it completed a follow-on and gave back some of its gains.

But there are several other biotechs that share the stage as the stars of the IPO show and darlings of analysts going forward, says Yahoo Finance. For example, Turning Point Therapeutics Inc. (TPTX), a San Diego-based biotech company developing small-molecule cancer treatments, priced its IPO back in April, selling 9.25 million shares at $18 each. Shares are now up 284% at $51. Pretty impressive.

According to TipRanks’ Stock Screener, analysts say two other biotech are bound for prominence, each of which are Buy-rated:

Oyster Point Pharma Inc. (OYST) is a clinical-stage biotech company focused on developing innovative treatments for ocular surface diseases. After its October 31 market introduction that offered 5 million shares of common stock at $16 per share, several analysts are betting on this name. Cowen’s Ken Cacciatorre tells investors that his bullish thesis is based on the Princeton, NJ-based company’s lead candidate, OC-01. The drug is being developed as a nasal spray to treat dry eye disease, a condition that affects over 30 million people in the US. Thanks to the noteworthy efficacy and safety profile demonstrated in the Phase 2b ONSET-1 study, the FDA stated that the trial could serve as one of two pivotal studies needed for approval. Shares are now up 21% from their IPO price.

And RAPT Therapeutics Inc. (RAPT), an immunology-based biotech company specializing in treatments for oncology and inflammatory diseases, went public on the same day as OYST to the tune of a 3 million share offering. Since then, shares have soared 205% from the $12 IPO price. Part of the excitement surrounding the South San Francisco-based company has been fueled by the opportunities for its CCR4 inhibitor programs, which exploit T cell homing as a way to treat a wide range of allergic inflammatory diseases and cancer. Its primary candidate, RPT193, has already progressed through a Phase 1a healthy volunteer study, which demonstrated a positive safety and PK/PD profile for the treatment of allergic inflammatory diseases. Wells Fargo analyst Jim Birchenough tells investors that he sees “peak revenue potential of $1.3 billion for RPT193 in the growing, multibillion dollar atopic dermatitis market.”

But resTORbio (TORC), which is developing immune system-boosting therapies for the elderly. Boston, MA-based resTORbio has underperformed since its January 2018 IPO, and it had traded at about half of its IPO price since the start of the year. The stock plummeted even further in mid-November after its lead candidate failed a late-stage trial. It is currently down 817% from its IPO.

Talk to you soon!

Steve Walker

Founder & Editor

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