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At a time when many biotech stocks fell on Federal Reserve Chairwoman Janet Yellen’s comments that the sector was overvalued, Sage Therapeutics raised $90 million in an upsized initial public offering at the top of its target range. After two other biotechs priced discounted offerings, its strong market debut stirred hopes that investor appetite for biotech IPOs had not waned. Sage had originally planned to sell 4 million shares in range of $14 to $16 but raised its target price a few days before going public. Sage priced 5 million shares at $18 per share, at the top of an increased target range and jumped 66.7 percent in its market debut to $30 per share on its first day of trading on the Nasdaq.
Founded in 2010 by Third Rock Ventures, which owned more than half of the company before the IPO, the early-stage biotech is developing allosteric receptor modulators to treat rare central nervous system disorders, first targeting a life-threatening form of epilepsy. Sage’s plan is to accelerate development by going after rare CNS disorders that can qualify for orphan and breakthrough status and defining aggressive endpoints that allow for quick decisions on whether or not to continue further development.
Two diagnostics companies also completed initial public offerings during the third week of July. Roka Bioscience, a developer of molecular diagnostics used to assess food safety, raised $60 million through the sale of 5 million shares at $10 a share. It priced 20 percent below the midpoint of the target range and raised 20 percent less than planned.
Molecular diagnostics company CareDx raised $40 million through the sale of 4 million shares at $10 a share. The company had originally planned to raise $50 million by selling 3.1 million shares in a range of $15 to $17. CareDx markets the AlloMap Molecular Expression Test that helps identify heart transplant patients at low risk of rejecting their transplants.
The hot biotech IPO market that characterized the first quarter of 2014 when 28 drug and diagnostic companies went public, cooled in the second quarter to 19 companies, and came almost to a standstill in the first two weeks of July. Syndax Pharmaceuticals and Ambrx withdrew their planned offerings at the end of June citing poor market conditions. But Sage’s strong debut shows investors still have appetite for companies with a well-defined business model and promising technology and assets.
So far this year, 61 life sciences companies have completed IPOs on U.S. exchanges, raising $4.1 billion. Biotech companies developing drugs and diagnostics accounted for 51 of those IPOs and $3.3 billion of the total capital raised. With 37 biotechs and 4 medical device companies in the IPO queue, we could see as many as 100 life science IPOs completed by year end.
July 21, 2014
http://www.burrillreport.com/article-sage_therapeutics_scores_90m_in_upsized_ipo_.html
