Although 2014 was always going to be a hard act to follow in terms of the record number of 77 biotech IPOs that were completed on U.S exchanges, the IPO window remained wide open despite a volatile year on the capital markets, particularly in the third and fourth quarters. In total, 54 companies successfully graduated to the public arena in 2015, collectively generating almost $5 billion, according to BioWorld Snapshots. That total ranks it the third highest annual total of IPOs. (See Number of U.S. Biotech IPOs 1999-2015, below.)

It is interesting to note that thanks to the incredible bull run the biopharma sector enjoyed, it helped support the creation of 170 new public companies since 2013, which is more than the collective total of the previous 14 years combined.

Although the number of biotech IPOs fell 30 percent short of the 2014 total, the offerings did generate a higher average per transaction at $91 million, compared to an average of $75 million a year earlier, a 21 percent increase.

In fact, 18 companies saw their offerings generate more than $100 million. Topping the list of that group was Axovant Sciences Ltd., a small Bermuda-based company formed in October 2014 to carry a phase III-ready asset bought from London-based Glaxosmithkline plc through approval in Alzheimer's disease. Axovant bought the drug, RVT-101, an oral selective 5-hydroxytryptamine 6 receptor antagonist, from GSK in a structured deal that called for $5 million up front. (See BioWorld Today, May 13, 2015.)

Its IPO grossed a whopping $362 million from about 24 million shares, including about 3 million shares sold pursuant to the full exercise of the underwriters' option. (See U.S. Biotech IPOs for 2015, below.)

Investors line up

Investors also lined up to grab a piece of Mechelen, Belgium-based Galapagos NV's upsized Nasdaq IPO, which grossed $241 million, fueled by the company unveiling positive phase IIb rheumatoid arthritis data for its selective JAK1 inhibitor filgotinib. (See BioWorld Today, May 15, 2015.)

Also topping the $200 million mark was immuno-oncology focused Nantkwest Inc., with a $238 million offering. The Cardiff-by-the-Sea, Calif.-based company received a warm reception from investors excited by its technology focused on developing several types of natural killer (NK) cells. Activated NKs (aNKs) make up a cell-based "off-the-shelf" treatment that's been tested in phase I trials. The company also is working on high-affinity NKs (haNKs), so named because they express high-affinity CD17, which could mean they can ramp up therapeutic efficacy of antibodies targeting cancer cells. Nantkwest expects to enter the clinic with haNKs this year. (See BioWorld Today, July 29, 2015.)

The red-hot chimeric antigen receptor T cell, or CAR T, space helped Cellectis SA, gross almost $230 million from its IPO of American depositary shares on the U.S. markets. The Paris-based company also trades on the Alternext market of the Euronext Paris under the symbol ALCLS. (See BioWorld Today, Feb. 24, 2015.)

Gene therapy remained a favorite with investors in 2015, which helped Regenxbio Inc., of Washington, generate almost $160 million from its IPO. The company is developing its NAV technology platform for AAV gene delivery, which consists of rights to more than 100 AVV vectors.

Save for biotech, the environment for IPOs in general in the U.S. was disappointing after coming off of two banner years, according to Renaissance Capital's 2015 U.S. IPO annual review, with a total of 169 IPOs completed that amassed only $30 billion, which is a six-year low.

The report noted that "health care was the single sector that held up, comprising a record 46 percent of IPOs as biotech deal flow remained strong."

Post market blues

While companies had no difficulty getting onto the market, their after-market performances have been less than stellar so far, with 60 percent of the graduating class seeing their share prices close out the year in the red. The biggest decliner is Fremont, Calif.-based Zosano Pharma Corp. (Nasdaq:ZSAN), whose share price was trading at year-end down 80 percent since its opening day pricing of $11. The company lost its partner, Novo Nordisk A/S, in July. Novo notified Zosano of its intention to discontinue the collaboration agreement related to development of a transdermal presentation of select glucagon-like peptide-1 analogues to be administered once weekly using Zosano's microneedle patch system for the treatment of type 2 diabetes. The companies entered the collaboration agreement in January 2014.

Although its share price has languished, the company did report upbeat third quarter results, in which Vikram Lamba, Zosano's CEO, said the company was "pleased with our progress in building the depth and breadth of our organization and our clinical development advancements." He was referring to the successful completion of a phase II trial for the ZP-Glucagon program in severe hypoglycemia, representing a potentially superior therapeutic delivery option for patients with type 1 diabetes. The firm also reported positive phase I results for its ZP-Triptan program for treatment of migraine. The ZP-Triptan patch was well tolerated and achieved rapid absorption compared to the zolmitriptan tablet, which is expected to translate to fast pain relief for migraine patients.

On the other side of the coin, the top IPO performer is Aclaris Therapeutics Inc., of Malvern, Pa., which has seen its shares (NASDAQ:ACRS) soar 149 percent since it closed its $63.8 million IPO in October of about 5.8 million shares of common stock priced at $11 per share, including the exercise in full of the underwriters' overallotment option for up to an additional 750,000 shares. The company is developing A-101, a high-concentration hydrogen peroxide topical solution, for seborrheic keratosis.

Collectively, the 2015 biotech IPO class managed to average a 5.4 percent gain and, in terms of valuation, eight biotech IPO graduates joined the $1 billion market cap club, helping the groups' market cap average reach $499 million.

Crowded runway

It is statistics like those that give hope to companies in the wings waiting for a chance to launch their IPOs.

Even a very rough start to 2016 on the capital markets, with the Dow Jones Industrial average shedding 5 percent of its value over four trading days in the wake of geopolitical and macroeconomic uncertainties, hasn't seemed to deter companies from their plans to join the public ranks.

No fewer than 11 companies have filed registration documents with the SEC to conduct IPOs, since the beginning of the year. All are hoping to continue to ride the momentum of a still-wide-open IPO window. They have added their names to the 22 companies that are already on the IPO runway.

Among the latest companies to file include:

  • • San Francisco-based gene therapy company, Audentes Therapeutics Inc., which filed with the SEC to raise up to $86 million. The company plans to list on Nasdaq under the symbol BOLD.
  • • Cancer Prevention Pharmaceuticals Inc., a Tucson, Ariz.-based company developing a new drug designed to prevent various types of colon cancer, has filed to raise up to $30.1 million on the NYSE under the proposed symbol CPP.
  • • Corvus Pharmaceuticals Inc., of Burlingame, Calif., filed an S-1 with the SEC seeking to raise up to $115 million, including a 30-day option for underwriters to purchase an undisclosed number of additional shares to fill overallotments. Corvus plans to list on Nasdaq as CRVS.
  • • Editas Medicine Inc., of Cambridge, Mass., filed an S-1 with the SEC seeking to raise up to $100 million, including overallotments. Editas said it plans to list on Nasdaq as EDIT.
  • • Cystic fibrosis drug developer Proteostasis Therapeutics Inc., of Cambridge, Mass., has filed to raise up to $86.3 million on Nasdaq, where it plans to list under the symbol PTI.
  • • Spring Bank Pharmaceuticals Inc., of Milford Mass., filed its S-1 with the SEC to raise up to $57.5 million. The company intends to list on Nasdaq under the symbol SBPH.
  • • Visterra Inc., of Cambridge, Mass., has filed to raise up to $69 million. The company has applied to have its common stock listed on Nasdaq under the symbol VIST.