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Ambit Biosciences to IPO

Biotech's Second IPO Attempt


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By Erik Neilson
Wednesday, February 27th, 2013

For companies in the biotech industry, things are shifting on Wall Street. A window of opportunity has opened up, making it more possible than ever before for drug developers to file IPOs.

There’s already a long list of companies pushing towards towards filing for IPO, and Ambit Biosciences is the latest to jump on the bandwagon.

The company, whose leading drug Quizartinib is used in the treatment of AML, has recently filed an IPO for $57.5 million and plans to trade on NASDAQ with AMBI as their stock ticker.

According to 24/7 Wall St, the book-running managers for this IPO are Citigroup and Leerink Swann, with BMO Capital Markets and Baird serving as the other underwriters.

This isn’t the first time that Ambit Biosciences has tried to go public. The company had no choice but to withdraw an $86 IPO in 2010 and instead pursue venture capital, based mainly upon the fact that the economy was in a very rough state at the time.

Ambit Biosciences managed to raise approximately $55 million by taking this route, with $25 million coming from a variety of pledges.

The company’s lead drug, Quizartinib, is a potent oral medication used to treat AML, a type of acute leukemia. It works as a selective inhibitor of FLT3, which is thought to be a legitimate target in treating the disease. Currently, Quizartinib is in phase 2b of clinical development. 

In addition to Quizartinib, Ambit Biosciences is developing a drug known as AC410. Like Quizartinib, AC410 is a potent, orally administered drug, this time used to treat autoimmune and inflammatory diseases by inhibiting JAK2.

Ambit Biosciences is not stopping at two drugs, however. The company has a third program in the works that focuses on two small molecule compounds: AC708 and AC855. While these compounds are in preclinical development, the company states they will potentially have utility in oncology, autoimmune, and inflammatory disease.

Each of the aforementioned compounds has been discovered internally by the company—a major selling point for Ambit Biosciences and supporting concept for its IPO. 

Perhaps interesting to note is that the company states current backers have agreed to buy shares in the Ambit Biosciences IPO. The company goes on to say that it will be offering a price per share equal to that of the IPO price. Among other venture backers are AstroZeneca PLC (NYSE: AZN) and Roche. 

While Ambit Biosciences stands to gain quite a bit of ground from this IPO, it is not securely locked into a winning scenario as of yet. Investors have shunned high-risk offerings for years and continue to be leery even with an improving economy

The company does not have the long-standing reputation that other classic biotech firms enjoy, which may serve to hurt it in the end. Much of this comes down to the risks that investors are willing to take, and it’s too soon to tell exactly what will come out of this. 

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The importance of this IPO extends far beyond Ambit Biosciences itself. Rather, it shows a progression for the entire biotech industry that could have a major impact on these companies’ financial support. Since a window of opportunity appears to be opening on Wall Street for biotech companies, they no longer need to embrace venture capital as a sole or primary source of support. 

It’s difficult to say exactly how much the biotech industry will attempt to continue getting involved in public offerings, although the fact that these and other companies have already jumped on the bandwagon shows that the industry has a close eye on Wall Street and how shareholders may be able to help them achieve their goals. 

Needless to say, the biotech industry as a whole is growing at an exponential rate. Discoveries are occurring more often than in the past, which is likely a result of the demand for better, more potent, and less harmful drugs.

Companies such as Ambit Biosciences stand to gain a lot of ground by taking the route of an IPO, but just as with anything else, Ambit must tread carefully in order to ensure it does not end up in the same boat as the failed IPO of 2010. Investors who are willing to take risks might see great rewards, but they also might find themselves ending up in the red.


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