IPO Update: Returns Sag As Seven More Biopharmas Go Public In September

The average return for the 54 drug developers that went public in the US during first three quarters of 2018 was 13.6% as of Oct. 1 versus 16.9% as of Aug. 31 for the 47 biopharma firms that launched IPOs during the first eight months of this year. September had seven new offerings after just two in August.

The seven biopharmaceutical firms that priced initial public offerings in the US in September brought the year-to-date total to 54 drug developer IPOs, showing that despite a decline in the average return, investors remain interested in new offerings.

The biopharma US IPO class of 2018 has an average return versus their initial offering prices of 13.6% as of Oct. 1 (see table below). That's a more than 3% drop from a month earlier, when the 47 drug developers that went public in the first eight months of this year had an average return of 16.9%, as of Aug. 31. Also, more than half of the companies that went public in the US were trading in negative territory as of Oct. 1 – 28 out of 54 – versus 26 out of 47 trading in the black at the end of August.

Still, returns remain higher than what investors are seeing from companies included in the Dow Jones Industrial Average, which was up just 7.8% year-to-date as of Oct. 1. But while the Nasdaq was up 13.8% year-to-date, the Nasdaq Biotechnology Index (NBI) was up just 9.1%, suggesting that newly public drug developers may be better investments – for now – than their already public peers.

Principia BioPharma Inc. and Y-mAbs Therapeutics Inc. were the first two drug developers to go public in the US in September and they gave IPO investors returns of 73.7% and 62.8%, respectively, as of Oct. 1. (Also see "Finance Watch: Lilly Completes Elanco Animal Health Spin-Out As New IPO Filings Keep Rising" - Scrip, 21 Sep, 2018.) Five more took the plunge during the last week of the month, but delivered flat to negative returns in their first few days of trading, including:

• The AstraZeneca PLC spin-out and antibiotic developer Entasis Therapeutics Holdings Inc., headquartered in Waltham, Mass., priced 5m shares at $15 each for $75m in gross proceeds on Sept. 25. The offering went to the market below a proposed $16 to $18 range and Entasis was the worst performer of the five biopharma firms that went public during the last week of September, closing at $10 per share on Oct. 1 – a 33.3% loss to IPO investors. (Also see "AZ Spins Out Entasis To Tackle Resistant Infections" - Scrip, 21 Jul, 2015.)

• South San Francisco-based Sutro Biopharma Inc., which is focused on cancer and autoimmune diseases, closed down 2.3% at $14.65 on Oct. 1 versus its Sept. 26 offering of 5.67m shares at $15 each for $85m in gross proceeds.

• Roivant Sciences GMBH urology subsidiary Urovant Sciences Ltd. – based in Basel, Switzerland and Irvine, Calif. – grossed $140m from the Sept. 26 sale of 10m shares at $14 each, which was at the bottom of the $14 to $16 range. IPO investors had a 14.6% loss as of Oct. 1 when Urovant's stock closed at $11.95.

• New Haven, Conn.-based Arvinas Inc., which is developing drugs that degrade disease-causing proteins, grossed $120m from the Sept. 26 sale of 7.5m shares at $16 each – at the top of a proposed price range of $14 to $16. The stock held steady at $16.01 on Oct. 1.

• Gritstone Oncology in Emeryville, Calif. sold 6.67m shares on Sept. 27 at $15 each – at the top of a proposed $13 to $15 range – to gross $100m to fund its tumor-specific cancer immunotherapy development. Despite the general enthusiasm for immuno-oncology, Gritstone IPO investors had a 10.3% loss as of Oct. 1 when the stock closed at $13.45.

Seven more biopharma companies have set terms for forthcoming IPOs in filings with the US Securities and Exchange Commission (SEC) since mid-September. Among the price setters:

• Kodiak Sciences Inc. of Palo Alto, Calif. could gross up to $135m from the sale of 9m shares at $13 to $15 each – terms the company proposed on Sept. 24 – to fund its development of novel therapies for high-prevalence ophthalmic diseases. Kodiak raised $33m in mezzanine financing in April to advance its anti-VEGF therapy KSI-301 into the clinic for wet age-related macular degeneration and diabetic retinopathy. (Also see "Finance Watch: Lots Of Money, Big And Small, Flowing Into Drug Development" - Scrip, 10 May, 2018.) It closed a $34m Series B round in 2016. (Also see "VC Round-Up: Microbiome Focused Lodo, T-Cell Firm Tmunity, And More" - Scrip, 15 Jan, 2016.) The IPO-tracking firm Renaissance Capital expects Kodiak to launch its offering during the first week of October.

• Deer Park, Ill.-based Eton Pharmaceuticals Inc., which was spun out of Imprimis Pharmaceuticals Inc. last year, proposed a $6 share price on Sept. 25 for a future offering of 3m shares, which would gross $18m – $2m less than the $20m it launched with in 2017. (Also see "Finance Watch: Cash Flows Into Public Biopharmas, Including IPOs; Atlas Raises $350m VC Fund" - Scrip, 6 Jul, 2017.)

• Tiziana Life Sciences PLC also proposed a relatively small IPO on Sept. 25 with the potential sale of 1.58m American Depository Shares (ADSs) at $10.25, which would gross $16.1m for the UK-based firm. Tiziana intends to start Phase I trials for its anti-CD3 monoclonal antibody foralumab (TZLS-401) in non-alcoholic steatohepatitis (NASH) and neurodegenerative diseases, such as multiple sclerosis, in late 2018 and early 2019. The compound was licensed from NovImmune SA in 2014 and the company in-licensed a second candidate from the Swiss firm at the start of 2017. (Also see "Deal Watch: Sanofi Begins 2017 By Ending Vaccine JV, Completing Swap With Boehringer" - Scrip, 3 Jan, 2017.) Tiziana's lead drug candidate is the CDK inhibitor milciclib, licensed from Nerviano Medical Sciences SRL in 2015, is being evaluated in various cancers in multiple Phase II studies.

• Alzheon Inc. originally intended to raise up to $80m, according to its initial SEC filing in March, but pulled the offering altogether in May and then returned with plans for a $40m IPO in August. Now, the company has proposed the sale of 2.5m shares at $13 to $15 each in a Sept. 28 filing, which would raise up to $37.5m before the sale of additional shares to meet overallotments. Framingham, Mass.-based Alzheon is trying to raise cash for a Phase IIb trial of its Alzheimer's disease drug ALZ-801. (Also see "Alzheon IPO To Fund New Phase III Trialling Of Failed Alzheimer's Drug " - Scrip, 19 Mar, 2018.)

• Bridgewater, NJ-based Osmotica Pharmaceutical Corp., which stands out among recent IPO pursuers as a revenue-producing biopharma firm, said in an Oct. 1 SEC filing that it will sell 8.3m shares at $14 to $16 each to gross up to $132.8m. The company specializes in the manufacturing and commercialization of complex generics.

• There's nothing small about allogeneic chimeric antigen receptor T-cell (CAR-T) therapy developer Allogene Therapeutics Inc., which launched in May with $300m, raised another $120m in September, and said in an Oct. 2 SEC filing that it will price 16m shares at $16 to $18m each – an offering that would gross up to $288m before overallotments. The South San Francisco-based company has a large portfolio of off-the-shelf CAR-T therapies licensed from Pfizer Inc. that it plans to aggressively move through the clinic. (Also see "Deal Watch: Allogene Gets Pfizer's Off-The-Shelf CAR-T Program, $300m Series A Backing" - Scrip, 3 Apr, 2018.)

• San Diego-based Equillium Inc. said in an Oct. 2 SEC filing that it will sell 4.67m shares at $14 to $16 each, which would gross up to $74.7m for early to mid-stage clinical trials of Biocon Ltd.'s CD6 inhibitor Alzumab (itolizumab). Equillium, developing the asset as EQ001, is investigating use in graft-versus-host disease and asthma.

Five additional companies have filed paperwork with the SEC in recent weeks to support new IPOs, including:

• San Diego-based PhaseBio Pharmaceuticals Inc. revealed a $34m Series D venture capital round on Sept. 5 then informed the SEC in a Sept. 21 filing that it intends to raise up to $86.25m in an IPO to fund its development of drugs to treat orphan cardiopulmonary disorders. (Also see "Finance Watch: Three New Funds, Including Former Amgen R&D Head Harper's Next Venture" - Scrip, 7 Sep, 2018.)

• LogicBio Therapeutics Inc. in Cambridge, Mass., which said on Sept. 25 that it would raise up to $86.25m to fund development of its genome-editing therapies. The company previously raised $50m in venture capital as of June 2017. (Also see "Arix Pegs LogicBio's Technology As 'Occam's Razor' Of Gene Therapy" - Scrip, 30 Jun, 2017.)

• Arog Pharmaceuticals Inc. in Dallas, Texas said in a Sept. 28 filing that it intends to raise up to $74.75m in a future IPO. Arog enrolled the first patients in August in two Phase III clinical trials for the oral pan-FLT3 inhibitor crenolanib in relapsed or refractory FLT3-mutated acute myeloid leukemia (AML) patients and the other in newly diagnosed AML patients. (Also see "Pipeline Watch – Updates From EULAR, EHA and ECNP" - Scrip, 25 Jun, 2018.)

• Jerusalem-based Gamida Cell Ltd., which closed a $40m Series F round in mid-2017, said in a Sept. 28 SEC filing that it will raise up to $69m. (Also see "Venture Funding Deals: $688.8m In Financings From Avitide To Zai Lab" - Scrip, 11 Jul, 2017.) Lead product candidate NiCord is a cord blood cell therapy developed with the company's nicotinamide (NAM)-based cell expansion technology as a potential universal curative stem cell graft for patients in need of a hematopoietic stem cell transplant (HSCT). NiCord is enrolling patients with high-risk leukemias in a Phase III study with top-line results expected in 2020 and the cell therapy has a breakthrough therapy designation from the US FDA for this indication. Gamida Cell plans to report Phase I/II results in 2019 for NiCord in severe aplastic anemia.  

• NGM Biopharmaceuticals Inc. in South San Francisco said in a Sept. 28 SEC filing that it plans to raise up to $75m in an IPO. (Also see "How NGM Bio Intends To Build An Old-School Biotech" - Scrip, 14 Feb, 2018.) NGM intends to move lead drug candidate NGM282, an FGF19 analogue, into a Phase IIb NASH study in the first quarter of 2019. (Also see "Stealthy NGM And Bristol Emerge As Serious NASH Competitors" - Scrip, 25 Apr, 2017.)

Returns On 2018 Biopharma IPOs In The US Through Oct. 1
Company	IPO Price	Oct. 1 Price	Return
Cue Biopharma Inc. (CUE)	$7.50	$8.73	16.4%
Menlo Therapeutics Inc. (MNLO)	$17	$9.67	-43.1%
Eyenovia Inc. (EYEN)	$10	$4	-60%
resTORbio Inc. (TORC)	$15	$13.95	-7%
Solid Biosciences Inc. (SLDB)	$16	$46.34	189.6%
ARMO BioSciences Inc. (ARMO)*	$17	$50	194.1%
Sol-Gel Technologies Ltd. (SLGL)	$12	$7.61	-36.6%
Evolus Inc. (EOLS)	$12	$19.05	58.8%
Biofrontera AG (BFRA)	$9.88	$13.65	38.2%
BioXcel Therapeutics Inc. (BTAI)	$11	$7.61	-30.8%
Arcus Biosciences Inc. (RCUS)	$15	$14.50	-3.3%
Homology Medicines Inc. (FIXX)	$16	$22.22	38.9%
Unum Therapeutics Inc. (UMRX)	$12	$10.37	-13.6%
Genprex Inc. (GNPX)	$5	$2.15	-57%
MorphoSys AG (MOR)	$25.04	$27.34	9.2%
Surface Oncology Inc. (SURF)	$15	$10.69	-28.7%
Unity Biotechnology (UBX)	$17	$15.99	-5.9%
Aslan Pharmaceuticals Ltd. (ASLN)	$7.03	$8	13.8%
Evelo Biosciences Inc. (EVLO)	$16	$11.73	-26.7%
Kiniksa Pharmaceuticals Ltd. (KNSA)	$18	$23.92	32.9%
Scholar Rock Holding Corp. (SRRK)	$14	$24.64	76%
Iterum Therapeutics PLC (ITRM)	$13	$6.75	-48.1%
MeiraGTx Holdings PLC (MGTX)	$15	$13.39	-10.7%
Verrica Pharmaceuticals Inc. (VRCA)	$15	$16.12	7.5%
Eidos Therapeutics Inc. (EIDX)	$17	$9.92	-41.6%
Xeris Pharmaceuticals Inc. (XERS)	$15	$17.32	15.5%
Kezar Life Sciences Inc. (KZR)	$15	$21.18	41.2%
Magenta Therapeutics Inc. (MGTA)	$15	$11.65	-22.3%
Aptinyx Inc. (APTX)	$16	$28.71	79.4%
AVROBIO Inc. (AVRO)	$19	$25.13	32.3%
Autolus Ltd. (AUTL)	$17	$30.64	80.2%
Forty Seven Inc. (FTSV)	$16	$15.05	-5.9%
Translate Bio (TBIO)	$13	$9.95	-23.5%
Tricida Inc. (TCDA)	$19	$30.13	58.6%
Neon Therapeutics Inc. (NTGN)	$16	$11.55	-27.8%
Entera Bio (ENTX)	$8	$5.06	-36.8%
Rubius Therapeutics Inc. (RUBY)	$23	$22.96	-0.2%
Replimune Group Inc. (REPL)	$15	$15.57	3.8%
Provention Bio Inc. (PRVB)	$4	$4	0%
Constellation Pharmaceuticals Inc. (CNST)	$15	$6.72	-55.2%
Allakos Inc. (ALLK)	$18	$41.32	129.6%
Crinetics Pharmaceuticals Inc. (CRNX)	$17	$27.49	61.7%
Aquestive Therapeutics Inc. (AQST)	$15	$17.31	15.4%
Liquidia Technologies Inc. (LQDA)	$11	$26.58	141.6%
Adial Pharmaceuticals Inc. (ADIL)	$5	$2.70	-46%
Vaccinex Inc. (VCNX)	$12	$6.92	-42.3%
Aridis Pharmaceuticals Inc. (ARDS)	$13	$12.44	-4.3%
Principia BioPharma Inc. (PRNB)	$17	$29.53	73.7%
Y-mAbs Therapeutics Inc. (YMAB)	$16	$26.05	62.8%
Entasis Therapeutics Inc. (ETTX)	$15	$10	-33.3%
Sutro BioPharma Inc. (STRO)	$15	$14.65	-2.3%
Arvinas Inc. (ARVN)	$16	$16.01	0.1%
Urovant Sciences Inc. (UROV)	$14	$11.95	-14.6%
Gritstone Oncology Inc. (GRTS)	$15	$13.45	-10.3%
Average:			13.6%

* Eli Lilly & Co. acquired Armo for $1.6bn, or $50 per share. (Also see "$1.6bn ARMO Buy Gives Lilly Its Most Advanced Immuno-Oncology Asset" - Scrip, 10 May, 2018.)