By Marie Powers
Diamedica Therapeutics Inc., a phase II biopharma targeting acute ischemic stroke and chronic kidney disease, completed its micro-IPO, raising $16.4 million by offering 4.1 million shares at $4, the low end of its proposed range. Synthorx Inc. went bigger, hauling in $131 million by offering 11.9 million shares at $11, the midpoint of its proposed $10 to $12 range.
But all eyes were on Moderna Inc., which also priced its offering at the midpoint of its proposed range of $22 to $24 and upsized by approximately 20 percent to offer 26.3 million shares at $23 apiece and collect a whopping $604 million, becoming the biggest U.S. biopharma IPO ever and fourth largest in the world.
Two years ago, Samsung Biologics Co. Ltd., a subsidiary of Samsung Group, raised $2 billion in its IPO on the Korea Composite Stock Price Index of the Korean Exchange. Others topping Moderna were China Resources Pharmaceutical Group, which raised $1.8 billion in November 2016, and Beigene Ltd., which raised $903 million in August of this year, both on the Hong Kong Stock Exchange, or HKEX. (See BioWorld Today, Nov. 1, 2016, Nov. 11, 2016, July 31, 2018, and Nov. 13, 2018.)
Moderna could collect about $90.7 million more – topping the totals of most of this year's U.S. IPOs – if underwriters exercise in full their overallotment option. A raft of bankers participated in the deal, with Morgan Stanley, Goldman Sachs and Co. LLC, J.P. Morgan, Bofa Merrill Lynch, Barclays and Piper Jaffray acting as lead managers. In its S-1, Moderna reported cash, equivalents and investments of $1.2 billion as of Sept. 30.
The filing vaguely described the use of proceeds as supporting drug discovery and development, reinforcing the company's manufacturing platform and capabilities, providing additional infrastructure to support its pipeline and expanding development of its messenger RNA (mRNA) platform and therapeutic pipeline. That work now will progress under public scrutiny, an exercise that will be something of a departure for CEO Stéphane Bancel, who has kept tight reins on disclosures from the Cambridge, Mass.-based company.
2018 likely to finish second to 2014 in IPO filings
But his fundraising and dealmaking prowess have done their talking. In 2013, Moderna inked its first major partnership, with Astrazeneca plc, in a tie-up that provided $240 million up front. That alliance yielded AZD-8601, an mRNA encoding human vascular endothelial growth factor-A for intradermal/epicardial treatment of diabetic ulcers and other vascular diseases, including coronary artery disease. In February, Astrazeneca initiated a phase IIa trial in individuals undergoing coronary artery bypass grafting surgery with moderately impaired systolic function. Moderna is owed potential milestones and royalties if the asset succeeds.
Moderna raised $110 million on the back of that collaboration before landing Alexion Pharmaceuticals Inc. early in 2014 in an option deal that paid $100 million up front and another $25 million in preferred equity. That alliance was short-lived, however. Last year, Alexion sacked a passel of partners as it sought to right its own ship. (See BioWorld Today, Jan. 14, 2014, and July 28, 2017.)
At the outset of 2015, Moderna closed the first in a trio of private financings that all rank in the top 10 private rounds in the biopharma industry, according to BioWorld data: $450 million in January 2015, $474 million in Sept. 2016 and February's $500 million haul. (See BioWorld Today, Jan. 6, 2015, Sept. 8, 2016, and Feb. 5, 2018.)
The company has additional collaborations with Merck & Co. Inc., Vertex Pharmaceuticals Inc., the U.S. Biomedical Advanced Research and Development Authority, or BARDA, and the Bill and Melinda Gates Foundation. (See BioWorld Today, Jan. 14, 2015, and June 30, 2016.)
Attention now turns to the performance of Moderna's shares (NASDAQ:MRNA), which opened Friday short of the IPO price and slid throughout the day, closing at $18.60 for a paper loss of 19.1 percent. As some consolation, the broader markets were hammered again, with the Nasdaq Composite off 219.01 points, or 3 percent, and the Nasdaq Biotechnology Index down 109.04 points, or 3.4 percent.
Moderna has some soulmates licking their wounds. With 64 U.S. IPOs priced so far this year, including foreign firms pricing American depositary shares, and with three weeks to go, 2018 looks to move into second place behind 2014 with a record 77 U.S. offerings. And, although most of the year's top money-makers remain in positive territory, as indicated in the chart below, biopharma's overall performance has been dismal, thanks in large part to fourth quarter market turmoil. (See related story in this issue.)
Diamedica plans to use its IPO proceeds to fund development of DM-199, its recombinant form of human tissue kallikrein-1, or KLK1, an endogenous serine protease produced in the kidneys, pancreas and salivary glands that helps to regulate local blood flow and vasodilation and to manage inflammation and oxidative stress. The company completed a phase Ib study to treat individuals following ischemic stroke and is recruiting participants in a randomized, double-blind, placebo-controlled phase II study in the indication. The company also ran a phase I/II study in non-insulin-dependent diabetes.
In its filing, Diamedica reported cash of $3.9 million as of Sept. 30. Craig-Hallum Capital Group acted as a lead manager on the deal. The Minneapolis-based company also lost ground on its opening day, with shares (NASDAQ:DMAC) closing at $3.10 for a loss of 90 cents, or 22.5 percent.
Synthorx swam against Friday's red tide. Its shares (NASDAQ:THOR) closed at $12.61 for a gain of $1.61, or 14.6 percent. The IPO raise followed a $63 million series C by the company in the second quarter. (See BioWorld, May 1, 2018.)
The San Diego company, helmed by biopharma veteran Laura Shawver, is advancing a series of improved cytokine therapies, led by Synthorin IL-2, an interleukin-2 tuned specifically for activity on certain immune cells, and expects to file an IND in the first half of 2019. Meanwhile, Synthorx is working to scale up its E. coli-based manufacturing technology and complete IND-enabling studies.
In its filing, the company reported $20.6 million in cash as of Sept. 30. Jefferies, Leerink Partners and Evercore ISI acted as lead managers on the IPO.