The pandemic hasn't kept biotechs from going public. In fact, through the first five or so months of the year, the industry has raised more than $3.3 billion through IPOs, more capital than biotechs have raised during the first five months of any of the previous 20 years.

Sure, 10 of the 19 IPOs this year were in January and February, before stay-at-home orders went into effect in the U.S., but quite a few companies have IPOed since then, raising money without executives ever leaving their homes, let alone their cities.

Zentalis Pharmaceuticals Inc., of New York, was trying to decide when to launch the roadshow when the stay-at-home orders came down. "We decided to bite the bullet. It was actually a very, very difficult decision. The Dow was falling 10% per day back then, and the VIX was greater than 55 when we launched the roadshow," Anthony Sun, Zentalis' CEO, told BioWorld.

The company did a four-day virtual roadshow instead of the typical 10 to 14 days, talking with investors on the phone or via video chat. The executive team followed the sun, meeting with investors in Europe starting around 6:30 in the morning, followed by investors in the U.S. on the East and West coasts and ending with investors in Hong Kong at 10 p.m. ET. "It was a pretty full day and pretty exhausting, but we managed to do a lot of investor meetings with this kind of a process,” Sun recalled.

Oric Pharmaceuticals Inc., of South San Francisco, was in a similar position, having done test-the-waters meetings with potential investors. The company also chose to do a truncated virtual roadshow over three and half days, meeting with about 50 investors in one-on-one meetings and another 70 to 80 in group calls. Being in different places, the executive team used a text chain to discuss how the meetings were going and who would cover what topics as time wound down.

"We talked internally about, maybe, one alternative is to sit tight and wait until everything abates," Jacob Chacko, president and CEO of Oric, recalled, noting that the company had a cash runway that would last for a year and a half. Ultimately, what pushed Oric to go ahead with the IPO was the successful IPO of Zentalis and others, as well as investors calling investment bankers to tell the bankers that they were still interested in investing in the IPO. "Things like that gave us confidence that we could probably launch the IPO, do the roadshow, even in the midst of all the craziness that was going on there."

Keros Therapeutics Inc., of Lexington, Mass., did a little longer of a roadshow, lasting eight days. "It was oddly efficient. You just have one call, after another, after another. Nobody is on the road. Everybody is talking to you from their home for the most part," Keith Regnante, chief financial officer, of Keros, told BioWorld.

"It was a time when there weren't that many deals in the works, so we were able to get the attention of investors," Jasbir Seehra, Keros' president and CEO, recalled.

New norm?

The executives had mixed opinions on how much the experience of virtual roadshows will impact the IPO process post-pandemic.

"We all agreed that this was going to be the new norm at least for the foreseeable future," Zentalis' Sun said of post-IPO discussions with the company's investment bankers. "I don't think we're going to go back to the full two-week traditional travel across the globe in a jet to do investments in the future. I think we have fundamentally shifted the way we do IPOs. Period."

Oric's Chacko was a little more on the fence. "My guess is it migrates to some mixture of the two," he hypothesized, noting that it's much harder to gauge investors reactions over the phone since you can't read their body language.

Keros' Seehra said he thinks the decision over whether to do a roadshow virtually or go and meet investors will likely depend on the experience of the team, how well known they are to investors and whether the company has a complex scientific story. "We were in a unique position in that the management team was well known and we have a pathway that has been clinically validated," Seehra noted. For less experienced teams, he said he thinks "the old-fashioned rubbing shoulders is still going to be important."

Going in through the backdoor

Timber Pharmaceuticals Inc., of Woodcliff Lake, N.J., started trading on the NYSE American exchange on May 19, but the biotech managed to avoid most of the complications caused by the pandemic by going public through a reverse merger with Biopharmx Corp., of San Jose, Calif.

"We thought this would give us much quicker access to capital and an entry into the capital markets than a traditional full IPO process," John Koconis, CEO of Timber, told BioWorld.

The companies entered their merger agreement on Jan. 28, and Timber had already lined up a $5 million bridge loan and an additional $20 million in new money to help fund the development of Timber's phase IIb assets, TMB-001, a topical isotretinoin for the treatment of congenital ichthyosis, and TMB-002, a topical rapamycin product for the treatment of tuberous sclerosis complex.

"We weren't going out during this period trying to raise new money," Koconis said of the pandemic, "From the interest of the investors, of course they needed additional reassurances and understanding of how COVID was going to affect our business."

Timber is looking to monetize Biopharmx's phase III-ready topical minocycline gel programs that Biopharmx has studied for the treatment of inflammatory lesions of acne vulgaris and papulopustular rosacea. Koconis noted that the company is looking at a variety of options, including a strategic partnership or other nondilutive strategy.

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