US biotech IPO market faces key test after record five pricings
The currently buoyant US market for biotech new issues faces a key test, after a record five companies priced Nasdaq offerings in a single day. The success of those listings in the immediate after-market is likely to be important gauge of the overall health of the sector as well as for the six biotech companies due to make their US market debut next week. Those latter companies include Autolus Therapeutics, a UK-based CAR-T therapy company that is a key holding for three of the sector’s investment companies – Arix Biosciences, Syncona (SYNC) and Woodford Patient Capital Trust (WPCT).
So far this year, 23 biotech companies have gone public in the US (including two, which were already listed ex-US), with one company – Eidos Therapeutics – pricing earlier this week. Shares of Eidos Therapeutics are currently trading at $23.60, well above the $17 IPO price. So far this year, pricings have been running at rate of roughly one to two per week. The stock price performance of these companies, however, has been rather mixed, with nine trading below their IPO price. However, one – Armo Biosciences – has been subject to a takeover at a price of almost three times its IPO price.
The five companies that were priced last night were:
- Aptinyx – developing NYX-2925 in two Phase II trials for diabetic peripheral neuropathy and fibromyalgia;
- Avrobio – developing potentially curative ex vivo lentiviral-based gene therapies for Fabry disease, Gaucher disease, Pompe disease and cystinosis;
- Kezar Life Sciences – developing KZR-616 for lupus;
- Magenta Therapeutics – developing products for use in stem cell transplants; and
- Xeris Pharmaceuticals – developing an product for hypoglycemia.
Of these companies, three priced at the mid point of the indicated range (Kezar, Magenta and Xeris), one at the top end (Aptinyx) and one above the range (Avrobio – $19, versus $16-18). Kezar and Xeris were both able to issue c10% more shares than was indicated in the prospectus, but the other companies issued the amount indicated to investors. Aptinyx, Xeris and Kezar have begun trading and are currently at a 20-25% premium to their offer prices. Details on the financial terms are shown below:
| Company | Ticker | Price ($) | Shares sold (m) | Sum raised ($m), gross | Market cap ($m) | Pre-money valuation ($m)* |
| Aptinyx | APTX | 16 | 6.4 | 102.4 | 513.9 | 411.5 |
| Avrobio | AVRO | 19 | 5.2 | 98.8 | 438.9 | 340.1 |
| Kezar Life Sciences | KZR | 15 | 5.0 | 75.0 | 274.8 | 199.8 |
| Magenta Therapeutics | MGTA | 15 | 6.6 | 99.0 | 516.4 | 417.4 |
| Xeris Pharmaceuticals | XERS | 15 | 5.7 | 85.5 | 296.0 | 210.5 |
Note: market cap is based on offer price, *pre-money valuation is market cap less sum raised.
The six companies at the final stage of the IPO process are listed in the table below:
| Company | Ticker | Indicated range ($) | Shares offered (m) | sum raised ($m) | Market cap (post money) ($M) | pre-money valuation ($m) |
| Autolus Therapeutics | AUTL | $15.00 – $17.00 | 7,812,500 | 125 | 604 | 479 |
| Forty Seven | FTSV | $14.00 – $16.00 | 6,700,000 | 101 | 444 | 344 |
| Neon Therapeutics | NTGN | $15.00 – $17.00 | 6,250,000 | 100 | 451 | 351 |
| Neuronetics | STIM | $14.00 – $16.00 | 5,000,000 | 75 | 244 | 169 |
| Translate Bio | TBIO | $12.00 – $14.00 | 7,700,000 | 100 | 560 | 460 |
| Tricida | TCDA | $16.00 – $18.00 | 10,300,000 | 175 | 659 | 484 |
Note: the sun raised and market cap are based on the mid-point of the indicated range. Pre-money valuation is the potential market capitalisation less the gross sum to be raised.