Like travelers encountering an oasis after a spiritless trek through the desert, investors rushed Wednesday to shares of Chinese cancer drug developer Beigene Ltd. and Cambridge, Mass.-based genome-editing company Editas Medicine Inc. as they became the first two companies in any sector to price U.S. IPOs this year.
Beigene priced 6.6 million American depositary shares (ADSs) at $24 per ADS. Shares (NASDAQ:BGNE) opened above that issue price and ended the day at $28.32, up 18 percent, with about 2.05 million shares changing hands.
Shares of Editas, too, were received warmly. The company, which priced 5.9 million at $16 apiece, saw its stock (NASDAQ:EDIT) open at $18 and end the day at $18.20, up 13.8 percent, with about 4.1 million shares changing hands.
Whether that trend will continue is anyone's guess, but the Wall Street welcome at the very least justifies the optimism of the additional 10 biopharmas that have dared to file for IPOs so far this year, despite the capital markets meltdown.
The month of January saw nary an IPO pricing the first IPO-less month since September 2011, according to Renaissance Capital and biopharma hasn't pulled off a U.S. IPO since Axsome Therapeutics Inc., of New York, closed its offering of 6 million shares at $9 each in late November. According to BioWorld Snapshots, the sole biopharma to go public in December was Diurnal plc, a Cardiff, U.K.-based firm working on modified-release versions of hydrocortisone, which listed on the Alternative Investment Market in London. (See BioWorld Today, Dec. 22, 2015.)
By this time last year, five biopharmas had priced IPOs on Nasdaq. For 2015, a total of 54 companies went public on U.S. markets, raising nearly $5 billion. Health care companies also propped up the overall IPO market last year, comprising about 46 percent of the offerings. (See BioWorld Insight, Jan. 11, 2016.)
BEIGENE RAMPING UP CLINICAL PIPELINE
The recent capital market activity failed to hinder Beijing-based Beigene, which has been planning its Nasdaq debut since October, originally aiming for $100 million. Instead, it upsized its offering from 5.5 million to 6.6 million and priced its ADSs, each representing 13 ordinary shares, at the top end of the proposed range, for gross proceeds of $158.4 million. (See BioWorld Today, Oct. 20, 2015.)
Underwriters Goldman, Sachs & Co., Morgan Stanley and Cowen and Co. hold a 30-day option to purchase an additional 990,000 ADSs to cover overallotments, which could add another $23.8 million. Proceeds would add to the roughly $100 million on its balance sheet, as estimated, at the end of December, and will be used largely to bolster clinical trial activity. The immuno-oncology firm already has trials ongoing in Australia, with several cleared in China and the U.S., and said it plans to expand studies for both monotherapy and combination treatment. (See BioWorld Today, Jan. 27, 2016.)
Its pipeline includes three small-molecule candidates Bruton's tyrosine kinase inhibitor BGB-3111, RAF dimer inhibitor BGB-283 and PARP inhibitor BGB-290 as well as one monoclonal antibody, BGB-A317, a PD-1 checkpoint inhibitor.
Beigene also will use proceeds to fund preclinical research. The company disclosed plans to lease and build a manufacturing facility, for which it entered a ¥120 million (US$18.2 million) loan agreement with Suzhou Industrial Park; the firm has committed to repay 50 percent of that loan by September 2018.
The IPO is expected to close Feb. 8.
CRISPR/CAS9 COMES TO NASDAQ
While Beigene likely benefited by working in the hot immuno-oncology space, Wednesday's other IPO pricing featured a firm operating in the equally hot if slightly more controversial space of genome editing.
Founded in 2013 based on the CRISPR/Cas9 technology, Editas priced 5.9 million shares at $16 per share the low end of its proposed range for proceeds of $94.4 million. Another $14.2 million could add to that if underwriters exercise their full 885,000-share overallotment option.
To date, most of Editas' funding has come from venture rounds. The firm, which raised $43 million in a 2013 series A financing and $120 million in an oversubscribed series B round last year, boasts an impressive roster of investors, including Flagship Ventures, Polaris Partners, Third Rock Ventures, Deerfield Management, Ecor1 Capital, Google Ventures and Bngo, an investment firm representing the likes of Bill Gates. Editas also picked up $25 million in an up-front payment from its pact with CAR T-cell developer Juno Therapeutics Inc. (See BioWorld Today, Nov. 25, 2013, May 28, 2015, and Aug. 11, 2015.)
The company had cash and equivalents of about $155.3 million as of Sept. 30.
It intends to use proceeds from the IPO to support preclinical and clinical studies of lead program targeting Leber congenital amaurosis type 10, or LCA10, a genetic form of progressive blindness. Editas has demonstrated that combinations of Cas9 and guide RNA pairs could restore normal messenger RNA and protein expression in cells taken from patients with a specific mutation that causes LCA10. A clinical program is expected to launch in 2017.
Funds also will go toward preclinical work in the Juno collaboration, while the remainder of proceeds will be used to expand the platform technology, advance preclinical programs and support working capital and general corporate purposes.
Morgan Stanley and J.P Morgan are acting as joint book-running managers, while Cowen and Co. is acting as lead manager and JMP Securities is serving as co-manager. At the close of the IPO, Editas will have about 35.7 million shares outstanding or about 36.6 million if underwriters exercise the full overallotment option.
In other IPO news:
Cancer Prevention Pharmaceuticals Inc., of Tucson, Ariz., set a range for its proposed IPO, aiming to raise $25 million by offering 1.9 million shares priced between $12 and $14. The company, which is developing a drug designed to prevent various types of colon cancer, plans to use proceeds in part to fund completion of its phase III trial of CPP-1X/sul for familial adenomatous polyposis, as well as additional studies necessary for filing an FDA new drug application; to boost efforts toward developing other indications for CPP-1X/sul. It also plans to advance additional candidates and expand its internal R&D capabilities. Aegis Capital Corp. is acting as the sole book-running manager. The firm seeks to list on NYSE under the symbol CPP. //