Finance Watch: 2021 Now Has More IPOs Than 2020, But With $3.2bn Less

Public Company Edition: It took 256 days for 2021 to surpass the 2020 record of 86 biopharma initial public offerings in the US in one year. Also, Procaps raised $115m ahead of its SPAC merger and aTyr and bluebird raised $75m each.

The number of US initial public offerings by biopharmaceutical companies in 2021 reached 87 on 14 September when DICE Therapeutics, Inc., Tyra Biosciences, Inc. and Pasithea Therapeutics Corp. went public, breaking the prior record set in 2020 when 86 firms launched IPOs.

However, this year’s crop of newly public companies raised $13.8bn, which is $3.2bn less than the $17bn raised in last year’s first-time offerings. Even excluding the outlier $2bn IPO launched by drug royalty purchaser Royalty Pharma in June 2020, the amount raised in 2021 is $1.2bn behind last year.

Several dynamics probably factor in to the difference in gross IPO proceeds, such as the number of companies still in preclinical development that are launching first-time offerings and the ongoing economic uncertainty related to the COVID-19 pandemic. It also appears that investors are viewing less-established biopharma companies with little in the way of previous financing and few drug candidates in development with an appropriate amount of hesitancy. That seems to be the case for this month’s first three IPOs, at least.

 

DICE Therapeutics, formerly known as DiCE Molecules, launched its IPO less than a month after it closed a $60m series C-1 round in August, bringing its total venture capital funding to date to about $200m. South San Francisco-based DICE grossed $204m in its 14 September IPO from the sale of 12 million shares at $17 each, which was at the top of a proposed price range of $15 to $17.

The eight-year-old company is using its DNA-encoded library platform to discover and develop new therapies, all of which are in preclinical development. However, DICE will use its new funding to take its lead program, an interleukin-17 (IL-17) antagonist, into the clinic. It will also advance other preclinical assets, including its α4ß7 and αVß1/αVß6 integrin programs as well as pipeline expansion efforts. (Also see "Finance Watch: Venture Capital, Debt Financings Led Fundraising Surge In Q2" - Scrip, 27 Aug, 2021.)

Tyra Therapeutics raised a little less venture capital than DICE and in a shorter amount of time before it went public on 14 September, but the Carlsbad, CA-based precision oncology firm was able to gross $172.8m from the sale of 10.8 million shares at $16 each – at the top of a $14 to $16 proposed range. Tyra previously closed a $50m series A round in January 2020 and a $106m series B round in March to fund its development of cancer therapies targeting acquired resistance to existing oncology drugs. (Also see "Finance Watch: Latest Slate Of VC Mega-Deals Led By China-Based Biopharmas" - Scrip, 31 Mar, 2021.)

The company set out to identify its first drug candidates in 2021 and take them into the clinic in 2022. Its initial focus is a pipeline of selective inhibitors of fibroblast growth factor receptor (FGFR), including lead candidate TYRA-300 targeting FGFR3 for the treatment of bladder cancer.

Pasithea Therapeutics, on the other hand, disclosed just $1.5m in prior funding before it filed paperwork with the US Securities and Exchange Commission (SEC) in April to initiate the IPO process. The Miami Beach, FL-based company wants to develop novel treatments for psychiatric and neurological disorders but has not revealed any drug candidates to date. However, it has a small income stream as a provider of support services for clinics that administer ketamine as a treatment for depression.

Without a drug development pipeline and with little prior financial backing, Pasithea’s 14 September IPO was small in comparison with the DICE and Tyra offerings. The company grossed $24m from the sale of 4.8 million units at $5 each. Each unit consisted of one share of common stock and a warrant to buy an additional share of common stock. The offering also priced at the bottom of a $5 to $7 proposed range.

Public And Near-Public Company Financings

Barranquilla, Colombia-based Procaps Group, which announced earlier this year that it would sidestep the IPO process and go public in the US by merging with a special purpose acquisition corporation (SPAC), announced on 9 September that it raised $115m from a private placement of senior notes.

The notes carry a 4.75% interest rate, but that will rise to 5.5% if the company’s merger with the SPAC Union Acquisition Corp. II (LATN) does not close. Procaps will use the proceeds from its private placement of senior notes to extinguish existing debt and fund its operations.

The company is a contract development and manufacturing organization (CDMO) that produces over-the-counter and prescription drugs, nutritional supplements and hospital supplies globally. Procaps and LATN expect to close their merger in the third quarter of this year. The transaction will give the CDMO access to $136.9m held in trust by LATN and $100m from a concurrent private investment in public equity (PIPE) financing. (Also see "Finance Watch: Five Biopharma IPOs Bring US Total To 60 In 2021" - Scrip, 29 Jun, 2021.)

Private Placements, Debt Rather Than FOPOs

In addition to private placements by bluebird and Procaps, other companies have raised capital in private placements and debt financings recently rather than launch FOPOs when their stock prices are trading at low levels. Bluebird’s stock, for instance, was down almost 58% year-to-date as of 17 September.

The following companies are trading 34% to 55% below their 2021 peak stock prices, but raised cash through two private placements and a loan facility on 16 September:

• Gritstone Bio Inc. (cancer and infectious disease immunotherapies), $55m from a PIPE at $11 per share,

• Vincerx Pharma Inc. (novel cancer therapies), $50m from existing investors and others at $14.50 per share, and

• Aptinyx Inc. (NMDA modulators for brain and nervous system disorders), $50m in a loan facility from K2 HealthVentures, with $15m available upon closing.

In recent financial updates from already public companies:

• San Diego-based aTyr Pharma, Inc. grossed $75m from a follow-on public offering (FOPO) of 9.4 million shares at $8 each. The company has built a pipeline of protein compositions derived from 20 transfer RNA (tRNA) synthetase genes and their extracellular targets, but its primary focus is ATYR1923, which binds to the neuropilin-2 receptor to down-regulate immune engagement in inflammatory lung diseases. ATyr recently reported positive Phase Ib/IIa results for the drug in pulmonary sarcoidosis.

• Cambridge, MA-based bluebird bio disclosed a private placement of its stock on 8 September that raised $75m from a health care investment fund selected through a competitive fundraising process. The new money combined with $900m in existing cash will fund the operations of gene therapy-focused bluebird and 2seventy bio, which bluebird will spin out as a separate company focused on oncology products in October. (Also see "Bluebird Spins Off Oncology Business As Cell, Gene Therapy Segments Grow Apart" - Scrip, 11 Jan, 2021.)