Finance Watch: 2021 Is Now Two Away From 100 Biopharma IPOs

Public Company Edition: Entrada’s initial public offering grossed $181.5m while Aura raised $75.6m and Biofrontera brought in $18m. Also, AnaptysBio received $250m in Jemperli royalty deal and 4D Molecular Therapeutics grossed $118.8m in a follow-on offering.

Intracellular medicines pioneer Entrada Therapeutics, Inc., cancer drug developer Aura Biosciences, Inc. and dermatology-focused Biofrontera Inc. launched initial public offerings on 28 October, raising $275.1m combined and bringing the number of biopharmaceutical company IPOs in 2021 to 98.

The year is two offerings away from hitting the 100 IPO mark despite wild swings in biopharma company valuations in 2021, including a 4% average loss among the 88 drug developers that launched first-time offerings during the three quarters of 2021. (Also see "IPO Update: Average Return Turns Negative For Newly Public Biopharma Firms" - Scrip, 4 Oct, 2021.) Two of the three most recent IPOs delivered positive returns for the offerings’ investors in their first day of trading on 29 October.

Boston-based Entrada Therapeutics grossed $181.5m from the sale of 9.1 million shares at $20 each – in the middle of a proposed $19 to $21 range – and closed up 19.8% at $23.95 at the end of its first day. The company previously closed a $116m series B venture capital round at the end of March.

Entrada aims to deliver a new class of medicines known as endosomal escape vehicles (EEVs) to engage intracellular targets previously considered inaccessible and undruggable in the areas of neuromuscular and neurological diseases, immunology and oncology. The company’s oligonucleotide, antibody and enzyme-based product candidates are engineered for delivery to a wide variety of organs and tissues. The preclinical-stage firm’s lead development programs are in Duchenne muscular dystrophy and myotonic dystrophy type 1.

Aura Biosciences in nearby Cambridge, MA, which is developing virus-like drug conjugates (VDCs) to treat cancer, grossed $75.6m in its IPO of 5.4 million shares at $14 each – at the low end of a proposed $14 to $16 range – and closed up 5.7% at $14.80 on 29 October. The clinical-stage firm previously raised $80m in venture capital financing at the end of March.

Aura’s VDCs are designed to target and destroy cancer cells selectively and activate the immune system for long-lasting anti-tumor activity. Lead product candidate belzupacap sarotalocan (AU-011) is in Phase II for the treatment of primary choroidal melanoma, a rare form of eye cancer. Future development programs will focus on additional ocular oncology and solid tumor indications, such as non-muscle invasive bladder cancer.

In a third IPO by a Massachusetts biopharma firm, Woburn-based Biofrontera raised $18m from its sale of 3.6 million units at $5 each; each unit consisted of one share of common stock and a warrant to buy an additional share. The company sells multiple products for dermatological indications, with a focus on photodynamic therapy and topical antibiotics for conditions such as actinic keratoses and impetigo. Its stock closed down 11.6% at $4.41 on 29 October.

Three health care-focused special purpose acquisition corporations (SPACs) – blank check companies that go public with the goal of merging with another company, often in a specific industry – also launched IPOs during the last week of October, including:

• Arbor Rapha Capital Bioholdings Corp. I, which grossed $150m on 28 October from the sale of 15 million units (each consisting of a share of common stock and a warrant to buy one third of another share) at $10 apiece, to fund its combination with a biopharma company;

• Deep Medicine Acquisition Corp., which raised $110m on 26 October from the sale of 11 million units at $10 each (units consist of one share and a warrant to buy one tenth of an additional share) to combine with a health care company with an enterprise value of $500m to $1bn; and

• OPY Acquisition Corp. I, which also went public on 26 October and grossed $110m from the sale of 11 million units at $10 each (a unit consisted of a share and a warrant to buy half of another share). OPY I plans to merge with a life science company developing novel therapeutics, medical devices or services that help improve health care outcomes.

Seeing an opportunity to realize significant returns from public biopharma companies, Frazier Healthcare Partners – best known for its venture capital investments – said on 28 October that it closed a new fund to invest in small- and mid-cap public biotech companies. Frazier Life Sciences Public Fund LP has $830m to participate in IPOs and follow-on public offerings (FOPOs). The new fund is Frazier’s first fund dedicated solely to public company investing.

FOPOs And Other Recent Public Company Financings

Rather than launch its own FOPO, San Diego-based AnaptysBio, Inc. revealed a new $250m financing that is non-dilutive to existing investors. AnaptysBio said on 25 October that it received the cash payment from Sagard Healthcare Royalty Partners in exchange for the company’s 8% royalty on sales up to $1bn annually from GlaxoSmithKline plc’s PD-1 inhibitor Jemperli (dostarlimab).

Sagard also is entitled to certain regulatory and commercial milestone fees that GSK is scheduled to pay AnaptysBio, but the biopharma firm will keep its 12%-25% royalty from Jemperli sales above $1bn. Repayment of the financing from Sagard will be complete when the royalty purchaser receives 125% of its investment by the end of 2026 ($312.5m) or 135% in 2027 ($337.5m) or 165% thereafter ($412.5m). AnaptysBio noted that GSK anticipates peak Jemperli sales of $1.4bn-$2.8bn.

Jemperli was approved in the US to treat adults with mismatch repair-deficient (dMMR) recurrent or advanced solid tumors in August. Before that, it was approved in April to treat adult patients with dMMR recurrent or advanced endometrial cancer. (Also see "GSK Grows Immuno-Oncology Credentials With New Dostarlimab Indication" - Scrip, 18 Aug, 2021.)

AnaptysBio, with the money from Sagard, expects to end 2021 with $600m in cash.

In other recent public company financings:

• Emeryville, CA-based 4D Molecular Therapeutics Inc. (4DMT) brought in $118.8m on 28 October from a FOPO of 4.75 million shares at $25 each to fund its development of targeted gene therapies, starting with ophthalmology, cardiology and pulmonary indications. The company has five programs in clinical development to treat Fabry disease, X-linked retinal pigmentosa, wet age-related macular degeneration, cystic fibrosis and choroideremia. 4DMT went public at $23 per share in December. (Also see "Finance Watch: AbCellera, 4DMT, Nanobiotix IPOs Bring In $775m Combined" - Scrip, 11 Dec, 2020.)

• French vaccine developer Valneva SE grossed $88.7m on 29 October from a global offering of 16,560 American depository shares (ADSs) at $39.42 per ADS (each consisting of two ordinary shares) and a concurrent private placement of 4.9 million ordinary shares outside of the US at €17 per share. The net proceeds plus the company’s €329.8m in cash as of 30 June will fund its operations through at least September 2023. Valneva will use its existing and new funding to support development of its Lyme disease vaccine through Phase II and handover to partner Pfizer Inc.; to complete development of its chikungunya vaccine through a regulatory filing in the US; to advance its COVID-19 vaccine through to commercialization; and to continue preclinical research. (Also see "Positive Signs For Valneva’s COVID-19 Vaccine, But Efficacy Data And Orders Still Lacking" - Scrip, 18 Oct, 2021.)

• Synthetic lethality specialist Repare Therapeutics, Inc., which went public at $20 per share in June 2020, grossed $88m on 27 October from a FOPO of 4 million shares at $22 each. (Also see "Finance Watch: 14 Biopharma IPOs In One Remarkable Month" - Scrip, 26 Jun, 2020.) Cambridge, MA and Montreal, Quebec-based Repare is using its genome-wide, CRISPR-enabled SNIPRx platform to develop targeted cancer therapies focused on genomic instability, including DNA damage repair. Lead drug candidate RP-3500, an ATR inhibitor, is in Phase I/II development for the treatment of advanced solid tumors. PKMYT1 inhibitor RP-6306 is in Phase I for the treatment of patients with genetic alterations that should be sensitive to the drug.

• Florham Park, NJ-based Phathom Pharmaceuticals, Inc. proposed a FOPO of 5 million shares on 26 October but withdrew the offering on 27 October, saying that market conditions are not conducive to an offering on terms that would be in the best interest of its investors. Instead, the gastrointestinal disease-focused company said, it will draw down the remaining $100m available under the $200m term loan facility it secured in September from Hercules Capital Inc. (Also see "Finance Watch: Exscientia Launches Last IPO Of Q3, Brings US Total To 88" - Scrip, 1 Oct, 2021.) Phathom announced positive results in mid-October from the Phase III PHALCON-EE pivotal trial of its lead drug candidate vonoprazan, a potassium-competitive acid blocker (P-CAB), in the treatment of erosive esophagitis. (Also see "Pipeline Watch: Phase III Readouts In Breast And Liver Cancer Plus COVID-19" - Scrip, 22 Oct, 2021.) With multiple other studies for the drug ongoing, the company said its current cash balance of $225m as of 30 September plus the drawdown from its term loan facility will fund its operations through mid-2023.