IPO Update: TiGenix Debuts In December After Motif Launched In November As 2016 Offerings Best 2015
Executive Summary
Motif Bio and TiGenix were the 29th and 30th biopharma IPOs in 2016 with the only first-time offerings for November and so far in December, but looking at performance so far this year, IPOs by therapeutics firms in 2016 continue to outperform 2015 offerings.
TiGenix NV’s Dec. 14 initial public offering was the first biopharmaceutical IPO this month and the 30th for the year, but while 2016 has seen half as many IPOs as 2015, the new crop of publicly traded therapeutics companies are providing much better yields than their 62 peers who launched offerings last year.
TiGenix grossed $42.6m from the sale of 2.75m American depository shares (ADSs), representing 55m ordinary shares, at $15.50 per ADS, which was a 14% discount to the Belgian allogeneic stem cell therapy developer’s value on the Belgian stock market. The TiGenix offering follows the antibiotics-focused firm Motif Bio PLC into the public markets in the US; Motif raised $25m in November’s only biopharma IPO through the sale of 2.44m ADSs at $6.98 each.
With fewer therapeutics companies launching offerings in the US, that means there are fewer chances for firms that aren’t really ready to go public to slip through the IPO window. And with investors being more selective about which drug developers they’ll support – companies with truly innovative technology or with product candidates in the clinic – the quality of this year’s offerings has improved.
Biopharma firms that went public in 2015 provided an average return of 8.6% versus their IPO values as of Dec. 31, but that’s fallen sharply to an average loss of 16.9% as of Nov. 30. Conversely, the average return at the end of November for this year’s newly public companies was 18.6% versus their IPOs. (See table below showing performance for individual 2016 IPOs through Nov. 30.)
Gene therapy developer AveXis Inc. is the best-performing IPO company so far in 2016. (Also see "Year's First 4 IPOs Go South As Proteostasis, AveXis Launch" - Scrip, 12 Feb, 2016.) The company went public at $20 per share in February for net proceeds of $98.2m and the stock ended November at $59.12 – a 195.6% return versus the firm’s IPO price. [See Deal]
The path to the public market hasn’t been smooth for biopharma firms like AveXis, which only had preclinical and early clinical data to share with prospective investors, but the company was able to report strong preliminary results for its lead gene therapy candidate AVXS-101 from its ongoing Phase I study in infants with spinal muscular atrophy (SMA) type 1. AveXis was able to outline a path to late-stage testing, approval, manufacturing and commercialization that struck a chord with IPO investors.
“It’s been a very nice year and we’ve been pleased with how things have come about,” AveXis CEO Sean Nolan said. “Foundational to that performance is that the science has translated extremely well into patients.”
Investors Focus On Science, Clinical Programs In 2016, 2017
Bryan Giraudo, a managing director specializing in financial transactions for life science firms in the San Francisco office of investment bank Leerink Partners LLC, has worked on more than 100 IPOs and follow-on financings for biopharma and medical device companies.
For investors since the second half of 2015, Giraudo said, “it has been a very skittish market and the biggest casualty of that has been the biotech IPO market.”
Companies working on clinical trials that already had some data to define the development risk were able to go public in 2016 at a reasonable valuation, he said. Without clinical data, IPO hopefuls needed a strong research and development program that could provide multiple opportunities for new therapies.
“For companies with revolutionary big leaps, most of them are already public,” Giraudo said. “The IPOs we will be involved with in 2017, by and large, are clinical companies. The have a basket of assets that are through proof-of-concept or the have enough suggestion of proof of concept to get there.”
Investors that specialize in biotech and biopharma groups within larger investment funds will keep the sector’s IPO window open next year, but Giraudo expects more scrutiny of companies’ science, regulatory and commercial risks. Therapeutics firms “will have to be prepared for a deeper level of diligence,” he said.
Timing Is Everything For IPO Hopefuls
But biopharma companies should only go public when they’re ready for what that entails – constant scrutiny of their financial and drug development decision-making. Laurie Halloran, president and CEO of the Boston-based life science management and strategy consultancy Halloran Consulting, said some firms launched IPOs too early in their drug development process.
They’ve suffered the consequences of small missteps that are common early in R&D while having their stock traded in public eye. Several companies would have been better off to raise private money – either venture capital or licensing fees from partners – instead of going public while generalist investors were pumping billions of dollars into biopharma IPOs.
“I don’t see nervousness in the ecosystem in Boston for funding. I see activity for deals and acquisitions. There’s a lot going on, because there’s a continuous search for products to pull in to big pharma,” Halloran said. “For the little companies, it’s about finding the funding to do what they need to do, but with the IPO window open they had more options.”
She expects the IPO market for certain attractive biopharma investments to hold steady in 2017 without a big rise or fall in the number of offerings by therapeutics companies. And for those who stay private, there will be partnership opportunities and venture capital options.
“If you think of the ecosystem and where the money is coming from, pharma’s looking for products,” Halloran said. “It’s really still about making sure companies are able to go toward their next funding round and reach their next value inflection point.”
|
Company |
IPO Price |
Nov. 30 Price |
Return Vs. IPO |
|
Motif Bio PLC (MTFB) |
$6.98 |
$5.50 |
-21.2% |
|
Myovant Sciences Ltd. (MYOV) |
$15 |
$12.60 |
-16% |
|
Ra Pharmaceuticals Inc. (RARX) |
$13 |
$13.09 |
0.7% |
|
CRISPR Therapeutics AG (CRSP) |
$14 |
$21.82 |
55.9% |
|
AzurRx BioPharma Inc. (AZRX) |
$5.50 |
$4.12 |
-25.1% |
|
AC Immune SA (ACIU) |
$11 |
$11.59 |
5.4% |
|
Novan Inc. (NOVN) |
$11 |
$26.86 |
144.2% |
|
$12 |
$24.95 |
107.9% |
|
|
Gemphire Therapeutics Inc. (GEMP) |
$10 |
$9.53 |
-4.7% |
|
Kadmon Corp. LLC (KDMN) |
$12 |
$4.99 |
-58.4% |
|
Audentes Therapeutics Inc. (BOLD) |
$15 |
$16.43 |
9.5% |
|
Syros Pharmaceuticals Inc. (SYRS) |
$12.50 |
$13.58 |
8.6% |
|
Selecta Biosciences Inc. (SELB) |
$14 |
$20.50 |
46.4% |
|
Clearside Biomedical Inc. (CLSD) |
$7 |
$14.64 |
109.1% |
|
Moleculin Biotech Inc. (MBRX) |
$6 |
$2.70 |
-55% |
|
Reata Pharmaceuticals Inc. (RETA) |
$11 |
$25.99 |
136.3% |
|
Merus BV (MRUS) |
$10 |
$15.40 |
54% |
|
PhaseRx Inc. (PZRX) |
$5 |
$2.10 |
-58% |
|
Oncobiologics Inc. (ONS) |
$6 |
$3.64 |
-39.3% |
|
$12 |
$7.96 |
-33.7% |
|
|
Intellia Therapeutics Inc. (NTLA) |
$18 |
$15.75 |
-12.5% |
|
Aeglea Biotherapeutics Inc. (AGLE) |
$10 |
$5.17 |
-48.3% |
|
Corvus Pharmaceuticals Inc. (CRVS) |
$15 |
$15.43 |
2.9% |
|
$13.50 |
$13.84 |
2.5% |
|
|
Syndax Pharmaceuticals Inc. (SNDX) |
$12 |
$9.68 |
-19.3% |
|
$8 |
$10.53 |
31.6% |
|
|
Avexis Inc. (AVXS) |
$20 |
$59.12 |
195.6% |
|
Editas Medicine Inc. (EDIT) |
$16 |
$14.27 |
-10.8% |
|
BeiGene (Beijing) Co. Ltd. (BGNE) |
$24 |
$31.70 |
32.1% |
|
AVERAGES |
$11.91 |
$14.95 |
18.6% |
Editor’s Note: A more detailed look at biopharma IPO performance and expectations for next year was published here in Scrip’s sister publication In Vivo.