Last week, eight biotech companies went public on Nasdaq, raising a total of $645 million and adding a combined $3.3 billion in market valuation to the blistering-hot sector. Friday saw another five biotechs announce plans for initial public offerings, and this week, four that had previously announced their IPOs made the plunge. All in all, investors are even more bullish about biotech than Nasdaq’s Jordan Saxe predicted they would be at the start of the year.
“To be honest, this is more activity than we thought we would initially see,” says Saxe, senior managing director and head of healthcare capital markets at Nasdaq. He adds that he’s hearing a lot of interest from biotech companies planning IPOs for fall and early 2019, too. “Given our recent conversations with companies that are getting ready now, this is definitely a trend that is continuing.”
The biotech sector is continuing to benefit from conditions that fostered IPOs in the sector during the first half of the year. The business-friendly tax package, for example, makes it possible for Big Pharma companies to repatriate billions in dollars of cash they had been holding overseas. That cash can be poured into licensing deals, mergers and acquisitions—making the prospect of rich exit strategies for biotech companies more tangible.
But there are other encouraging trends that could be fueling the IPO frenzy, Saxe says. For one, many of the biotech companies that went public earlier in the year were able to price their shares within or above the range they initially set, and their shares continued to perform well. What’s more, biotech is attracting “crossover” investors—hedge funds and other institutions that pour money into both private and public companies. Fidelity and Deerfield Management are two examples of crossover investors in the health sector.
Such crossover investors lend some degree of stability to biotech IPOs, Saxe says. They’ve often been investing in these companies starting from the earliest stages—when the science is still unproven—and their long-term support can encourage future investors to bet on the sector. “These crossover investors take a significant amount of the equity being sold, but they also offer some validation of what the company is doing,” Saxe says.
Here’s the lowdown on this week’s four new entries and one biotech IPO that’s expected soon:
Tricida: This San Francisco company planned to haul in $150 million to tee up an FDA filing for TRC101, a drug to treat the kidney disorder metabolic acidosis. But the IPO went better than expected and the company took home $222 million after pricing shares above the range it initially set. TRC101 works by binding to and removing hydrochloric acid from the gastrointestinal tract, boosting bicarbonate levels in the blood and slowing the progression of chronic kidney disease. Earlier this month, the company announced that in its pivotal phase 3 trial, 59% of patients taking TRC101 achieved normal blood bicarbonate levels, compared to 22% of patients on placebo. The company spots a market opportunity of 3 million patients in the U.S. with chronic kidney disease. It plans to file for FDA approval next year and use the IPO proceeds to build out a commercial infrastructure to market it.
Forty Seven: This Menlo Park, CA-based company, which also went public yesterday, made a splash at the American Society of Clinical Oncology (ASCO) annual meeting earlier this month with positive early clinical trial data for its cancer treatment 5F9. The drug is designed to block CD47, which normally allows cancer cells to evade attacks from the immune system. At ASCO, Forty Seven announced that a combination of 5F9 and Roche’s Rituxan produced a complete response rate of 36% in patients with non-Hodgkin’s lymphoma. The data came just two days after the company announced its IPO plans. It raised $112 million.
Neon Therapeutics: Forty Seven rode the coattails of another immuno-oncology company: Cambridge, MA-based Neon. It went public Tuesday, raising $100 million. Its lead program, NEO-PV-01, is a personalized T-cell therapy being investigated in solid tumors. Neon is also developing NEO-SV-01, a cell therapy for breast cancer. Both treatments are called “neoantigen” cancer vaccines because they’re made by harvesting up to 20 antigens from patients’ tumors. In its IPO filing, the company said that NEO-PV-01 is currently in phase 1 trials and that it is planning a phase 1 for NEO-SV-01.
Translate Bio: In 2016, Translate Bio bought a drug-development platform from Shire, along with a lead product candidate to treat cystic fibrosis. The pipeline drug, called MRT5005, is a nanoparticle that encapsulates mRNA. Once in the lungs, the genetic material delivered by the drug produces proteins to replace those that are missing or defective. The Shire-developed drug platform is generating other product candidates, including a treatment for a rare liver disorder called OTC deficiency. The company, based in Lexington, MA, was seeking at least $115 million to advance MRT5005 through clinical trials, and it pulled off a $122 million offering Wednesday.
Entera Bio: This Israeli company initially filed to go public in January but put its plans on hold. Now it’s back and seeking to raise $55 millionto develop its oral formulation of parathyroid hormone for patients with hypoparathyroidism. The company is planning a phase 2b/3 trial of the drug, called EB612. Entera has also completed a phase 1 study of an osteoporosis treatment. Large molecules like parathyroid hormone are typically difficult to deliver in pill form, so they have to be injected. If EB612 succeeds, Entera says it will apply the technology towards developing other oral formulations of large-molecule drugs.
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