Even priced at a bottom-of-range $20, shares of Vir Biotechnology Inc. (NASDAQ:VIR) fell 30% to $14.02 in the first day of trading after the infectious disease specialist priced a $142.9 million IPO, intended to back its development of medicines targeting hepatitis B virus, influenza A, HIV and tuberculosis. The company, led by former Biogen Inc. CEO George Scangos, is largely owned by Arch Venture Partners and Softbank's Vision Fund.
Vir's debut, which unfolded against the backdrop of a rally in global stocks buoyed by signs of progress in U.S.-China trade and Brexit talks, contrasted with an up day for the Nasdaq Biotechnology Index, which rose 1.4% on Friday. It was the second biopharma IPO to price at the bottom of its range last week, following Biontech SE's $150 million Nasdaq debut on Oct. 10, and the fifth biopharma IPO globally in October, following offerings by Viela Bio Inc., Frequency Therapeutics Inc., Aprea Therapeutics Inc. and Biontech.
Three out of the five biopharma IPOs this month, those by Frequency, Biontech and Vir, are trading below their offer price, while a fourth, Aprea, is trading near its offer price.
Global biopharma companies collectively raised more than $12 billion from public and private transactions during the third quarter, according to an analysis by BioWorld Insight. But the amount raised from the seven public offerings in the quarter didn't match the comparable period one year ago.
Biotech IPOs in the "class of 2018 early stage IPOs have notably underperformed and driven the recent broader biotech IPO under-performance," Evercore ISI analysts concluded in a recent report on the sector. That shoe might be seen to fit Vir, which, after incorporating in April 2016, is primarily fundraising to support early stage programs drawn from its four technology platforms, focused on antibody, T cell, innate immunity and siRNA.
Proceeds from the San Francisco-based company's offering are slated to support an ongoing phase I/II trial of VIR-2218 in hepatitis B (HBV), to advance the HBV-neutralizing monoclonal antibody VIR-3434 through a planned phase I trial, and to advance VIR-2482 – designed as a universal prophylaxis for influenza A – through an ongoing phase I/II trial, as well as preparing for a potential registrational trial.
After initial data showed that VIR-2218 was generally well-tolerated in healthy volunteers while providing substantial reductions in HBsAg in patients at doses ranging from 20 mg to 200 mg, the company is expecting to have additional data from its phase I/II trial in the first half of 2020. Other anticipated readouts include data from the phase I trial of VIR-3434 in the first half of 2021 and data from the first flu season of the phase I/II trial of VIR-2482 in the second half of 2020.
Well-funded for a big mission
From the company's inception through June 30, its team has raised $630.7 million and had amassed $356.5 million in cash, cash equivalents and short-term investments in its treasury. Arch Venture Partners led a $150 million investment in the company alongside the Bill & Melinda Gates Foundation in January 2017. (See BioWorld, Jan. 9, 2017.)
Total revenue for the company was $4.7 million and $5.7 million for the six months ended June 30, 2018, and 2019, respectively.
Net losses at the company were $69.9 million in 2017 and $115.9 million in 2018 and hit $62.6 million for the six months ended June 30 as it built out new chemistry and manufacturing capabilities and pursued other projects to advance its work.
Among its expenditures, it has also devoted nearly $20 million and about 1.1 million of its shares to advancing a collaboration with Cambridge, Mass.-based Alnylam Pharmaceuticals Inc. on HBV-focused siRNA product candidates, including VIR-2218. Separately, it committed $10 million up front and up to $343.3 million in milestone payments to Astrazeneca plc's biologics arm, Medimmune Inc., for a worldwide, exclusive license to develop and commercialize half-life extended versions of two specified antibodies under development by MedImmune that target influenza A and influenza B.
Along the way, Vir has also made multiple acquisitions, buying Portland-based Tomegavax Inc. in 2016 for its vector-based vaccine platform and Switzerland's Humabs Biomed SA in 2017, a company that gained its founding investment from another high-profile figure in biotech, William Rutter. Last year, it added two more, snapping up South San Francisco's Agenovir Corp. for in-process research and development programs in HPV and HBV using CRISPR/Cas9. It also nabbed Statera Health Inc., a private company whose primary asset was a cloud-based predictive analytics platform that translates clinical data into casual hypotheses of disease pathophysiology.
Not modest in its goals, Vir's mission is "to create a world without infectious disease." In finding a path there, its approach is focused on "identifying the limitations of the immune system in combating a particular pathogen, the vulnerabilities of that pathogen and the reasons why previous approaches have failed," according to its S-1 filing.
The company sold a total of about 7 million shares in its IPO and granted underwriters a 30-day option to purchase up to about 1.1 million additional shares. Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Cowen and Co. LLC and Barclays Capital Inc. acted as joint book-running managers for the offering.