As though to underscore the recent strike-down of Myriad’s (NASDAQ: MYGN) BRCA patents by the Supreme Court, biotech IPOs have come back into prominence with a vengeance.
Witness Bluebird Bio’s recent fortunes. The biotech company, which was originally developed to focus on gene therapies for orphan diseases, set its IPO at $17/share on Tuesday. Instead, the company ended up raising $101 million when demand exploded, and the number of offered shares went up. As of Tuesday, stock shot up 50 percent, reaching $26/share, reports Fierce Biotech.
Bluebird can claim some impressive backers, though, including Arch Venture Partners, Forbion Capital Partners, RA Capital Management, and TVM Capital, in addition to unnamed ones. What’s really interesting is the turnaround in the fortunes of biotech IPOs in general.
To rehearse a well-worn fact: biotech IPOs are risky. Biotechs are inherently risky. They require significant start-up investments and have long and uncertain ROI times. After the mess of 2008, biotechs suffered a lot as far as capital investment was concerned. Finances tightened all around, aversion to risk was high, and biotechs were strapped for investment cash.
Bluebird is part of a new wave of biotech IPOs that have debuted without extensive trial data. As The Street reports, such IPOs—including those of Verastem (NASDAQ: VSTM) and Agios Pharmaceuticals—tend to imply greater assumptions of risk on the part of the investors.
Bluebird focuses on using a lentiviral vector to ex-vivo deliver functional genes to hematopoietic stem cells. The company targets monogenic diseases and presently has therapy programs for childhood cerebral adrenoleukodystrophy (CCALD), beta-thalassemia, sickle cell disease, and chimeric antigen receptors T-cells.
Despite that impressive slew of target programs, the key fact is that they’re all more or less in pre-clinical stages, and no actual patient tests have yet been performed. Instead, it’s the cash raised from the recent IPO that will see Bluebird pursue further clinical stage trials.
Thus far, Bluebird has pursued a non-interventional study for CCALD which showed encouraging prognoses, and the company’s French collaborators used a precursor to its LengtiGlobin product in six patients. Here, again, encouraging results were noted overall. The chimeric antigen receptor T-cells program received positive attention at a recent conference of the American Society of Clinical Oncology, but (again) remains at pre-clinical stages.
Bluebird’s biggest differentiation factor regarding gene therapy is that the company relies on lentiviral vectors because it allows for greater flexibility and precision when it comes to delivering genes into cells. On the one hand, it could be a major breakthrough and could alter the face of gene therapy for good. On the other hand, it’s a big risk considering the lack of hard data.
As though in a show of solidarity, Celgene Corporation (NASDAQ: CELG) has joined Bluebird as a partner and investor, having taken an interest in the company’s chimeric antigen receptors T-cells therapy. Certainly, this significantly lowers the company’s risk factor because of the financial muscle involved.
Bluebird is now the only publicly-traded company working in this area—making it even more attractive to investors.
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Bluebird isn’t alone in this “new wave” of startup biotechs debuting with flashy IPOs. Prosensa is the next company to eye. The European company has its range set at $11 to $13 per share and targets $60 million in capital for its pivotal-stage therapy combating Duchenne muscular dystrophy. 5 million shares will be offered.
If we assume the midpoint, as Nasdaq does, Prosensa stands to reach a market value of $408 million. The company was established back in 2011, is already partnered with GlaxoSmithKline (NYSE: GSK), and is competing against Sarepta (NASDAQ: SRPT).
Another expected public offering comes from Iroko, which is hoping to reach $145 million to support its present NSAID series of drugs.
A third one to watch out for will be Esperion Therapeutics, which targets patients with high levels of low-density lipoprotein cholesterol. Thus far, the company has already completed five clinical trials, two of which are in Phase 2a. The company aims for a range between $13 and $15, and will seek to raise $63 million from the upcoming IPO.
All things considered, right now is a great time for biotech IPOs, and it’s well worth focusing attention on this sector.
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