IPO Update: 28 Biopharma Companies Raise $3bn, Provide An Average 10% Return
Executive Summary
Even though half of the drug developers that have gone public in the US during the first two quarters of the year are providing negative returns, the 13 companies trading in positive territory bring the class of 2019's average return to 10%.
Fourteen of the 28 biopharmaceutical companies that launched initial public offerings in the US during the first half of 2019 are providing IPO investors with a negative return and one is trading flat as of 28 June. But with 13 firms trading in positive territory, including the three that went public during the last week of June, the average return for this year's IPOs is 10%.
The class of 2019 has raised nearly $3bn, including the $348.5m offering launched on 26 June by BridgeBio Pharma Inc. The rare disease-focused drug development company builder completed this year's largest US biopharma IPO. The best-performing offering in the first half was executed by Cortexyme Inc., which initiated a Phase II/III clinical trial for its novel Alzheimer's disease drug COR388 in April (see table below).
Palo Alto, CA-based BridgeBio – which builds subsidiary companies around drug candidates for genetic diseases, including certain cancers – generated a lot of excitement around its hub-and-spoke business model with its offering of 20.5m shares at $17 each to gross $348.5m on 26 June before the sale of additional shares to meet overallotments. The IPO went to market above its proposed $14 to $16 range and with 5.5m more shares than expected earlier this month.
BridgeBio launched in 2017 with $135m. (Also see "The Next Roivant Or Fortress? BridgeBio Raises $135m To Spin Out New Companies" - Scrip, 18 Sep, 2017.) It raised $299.2m in a private financing in January and will accelerate its company-building activities with this new cash. (Also see "BridgeBio’s $299m Gives It Two More Years Of Runway To Launch New Companies" - Scrip, 24 Jan, 2019.)
Also on 26 June, Waltham, MA-based Morphic Holding Inc. priced 6m shares at $15 each to gross $90m before overallotments. The company launched a bigger offering than previously expected after it proposed the sale of 5m shares at $14 to $16 each, which would've grossed up to $80m.
The developer of small molecule integrin inhibitors for chronic autoimmune, cardiovascular, metabolic and fibrotic diseases, and for cancer, has been on a fundraising and deal-making streak. (Also see "AbbVie Buys In On Morphic’s Oral Integrin Inhibitors, To Tune Of $100m" - Scrip, 18 Oct, 2018.) A month before it signed a deal with AbbVie Inc. for $100m up front, Morphic closed an $80m series B venture capital round. (Also see "Finance Watch: Morphic's 'Smooth' Progress With Oral Integrin Inhibitors Justifies $80m Series B" - Scrip, 26 Sep, 2018.)
Boston-based Karuna Therapeutics Inc. took its upsized IPO to market in the middle of a proposed $15 to $17 range for 4.38m shares, ultimately selling 5.58m shares at $16 each on 27 June to gross $89.2m before overallotments. The neuropsychiatry specialist raised a $42m series A round in 2018 and a $68m series B that was expanded to $80m earlier this year to fund Phase II development of lead drug candidate KarXT for schizophrenia. (Also see "PureTech’s Karuna Gets Another $68m For Re-engineered Lilly CNS Candidate" - Scrip, 19 Mar, 2019.)
Two New Biopharmas Get In Line For An IPO
Two biopharma companies added themselves to the IPO queue with US Securities and Exchange Commission (SEC) filings on 21 June – Fulcrum Therapeutics Inc. and Mirum Pharmaceuticals.
Cambridge, MA-based Fulcrum said in its SEC filing that it plans to raise up to $86.25m in a future offering to fund its development of small molecules that are designed to modulate gene expression in rare genetic diseases. The company previously raised a $55m series A round in 2016 and an $80m series B last year. (Also see "Finance Watch: Three New Funds, Including Former Amgen R&D Head Harper's Next Venture" - Scrip, 7 Sep, 2018.)
Fulcrum initiated a Phase I clinical trial for lead drug candidate losmapimod in facioscapulohumeral muscular dystrophy (FSHD) in February and plans to begin a Phase IIb trial in FSHD in mid-2019. It intends to submit an investigational new drug (IND) application to the US Food and Drug Administration in mid-2020 for FTX-HbF in the treatment of hemoglobinopathies, such as sickle cell disease and beta-thalassemia.
Foster City, CA-based Mirum also used $86.25m as the placeholder value for its potential IPO in its SEC filing. Mirum raised a $120m series A round in November and took back rights from Shire PLC to a Phase III-ready rare liver disease candidate that the start-up's founders previously shifted to Shire through the sale of Lumena Pharmaceuticals Inc.
Mirum initiated the Phase III MARCH clinical trial for maralixibat in the treatment of pediatric patients with progressive familial intrahepatic cholestasis (PFIC) in the second quarter of 2019 and it plans to initiate a Phase III clinical trial in Alagille syndrome (ALGS) in the first half of 2020. Phase II trials for volixibat in the treatment of adults with cholestatic liver diseases are expected to begin in 2020 with data available in 2022. For maralixibat, the company intends to complete enrollment in the MARCH study during the second quarter of 2020 and announce top-line Phase III data in late 2020.