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9 July 2018

Analysis: Life sciences IPOs recovering

Initial public offerings of companies from the life sciences sector appear to be rebounding in number during the first half of 2018 and news stories on our web from the past couple weeks clearly attest to it.

Author: Kaloyan Andonov, reporter, GCV Analytics

A number of life sciences companies – pharmaceutical and medical devices – backed by corporate venturers appeared in our news section because of going public or filing or an initial public offering in the past two weeks.

This is an interesting development, as the number of life-science IPOs had been on a downward trend, as the GCV Analytics chart here illustrates. IPOs normally constitute a relatively small portion of exits for corporate or traditional VCs. IPOs of corporate-backed life sciences companies, however, account for a significant number of those.

Since their peak at 36 transactions in 2014, the number of life sciences IPOs has been going down over the past few years to just 15 registered last year. During the first half of 2018, though, we have already reported 23 of them, which is a clear indicator that they are rebounding.

Xeris Pharmaceuticals, a US-based drug formulation developer backed by drug producer Institut Mérieux, floated on the Nasdaq Global Market and raised $85.5m,  after issuing 5.7 million shares priced at $15 each. Xeris has developed two formulation technology platforms, XeriSol and XeriJect, which can be used to create ready-to-use injectable and infusible drugs that can be stored at room temperature. The company’s main product is an injection for hypoglycaemia – low blood sugar – in diabetes patients.

Neuronetics, a US-based medical device developer backed by pharmaceutical firm Pfizer and diversified industrial conglomerate General Electric (GE), completed its IPO at $107.5m, after pricing 5.5 million shares at $17.00 each on the Nasdaq Global Market. However, its shares closed at $26.96, giving it a market capitalisation of about $451m, while underwriters took up an option to buy a further 825,000 shares. Neuronetics’ lead product is a device intended to treat psychiatric disorders by creating a magnetic field to stimulate parts of the brain associated with a person’s mood.

US-based cancer drug developer Neon Therapeutics went public in a $100m IPO that gave exits to diversified conglomerate Access Industries and pharmaceutical firm Pharmstandard. The company issued 6.25 million shares on the Nasdaq Global Select Market priced at $16.00 each, in the middle of the $15 to $17 range it had set. Neon develops immuno-oncology therapies to fight cancer by directing the immune system to neoantigens, an element of cancer cells that can be caused by genetic mutations.

Finally, US-based developer of antibodies developer Allakos filed for a $75m IPO which could provide exits to pharmaceutical firms Roche and Novo. Founded in 2012, Allakos is working on a treatment called AK002 that will address eosinophil and mast cell related diseases. Eosinophil disorder causes cells that are responsible for releasing toxins to be overproduced, leading to an inflammation of tissue. Mast cell-related diseases cause chemical mediators to be released inappropriately and excessively, leading to chronic symptoms ranging from skin rashes to anaphylaxis.

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