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The hot biotech IPO market has slowed but companies are still going public, doing whatever it takes to get the deal done. Minerva Neurosciences and GlobeImmune priced initial public offerings during the past week after dropping their proposed target price, raising significantly less than they had originally expected. Minerva Biosciences priced its offering on the last day of the quarter to raise $32.7 million. The Cambridge, Massachusetts-based biotech sold 5.5 million shares at $6 a share, a 45.5 percent discount from its original target midpoint of $11 a share. Minerva will use the funds to advance mid-stage development of therapies for central nervous system disorders, such as schizophrenia and major depressive disorder. The biotech’s shares were up just 0.8 percent in the first day of trading.
Louisville, Kentucky-based GlobeImmune priced its initial public offering of 1.5 million shares at $10.00 per share to raise $15 million. Previously, the biotech had hoped to sell 2.2 million shares in a range of $15 to $17 a share. GlobeImmune’s technology, called Tarmogens, stimulates T-cells to destroy infectious pathogens or cancer cells. The biotech will use the funds to advance its pipeline of drug candidates. GlobeImmune has partnerships with Gilead Sciences to develop Tarmogens against chronic hepatitis B, and Celgene, its largest shareholder, for oncology products.
Although investors in biotech IPOs have become more cautious, 52 biotech companies developing innovative therapies have completed IPOs globally in the first half of 2014, with 43 of the offerings completed on U.S. exchanges. These companies have raised $3.7 billion globally, $3.1 billion of that on U.S. exchanges.
As a group, they not only outperformed the general market, but also the other life sciences sectors, such as diagnostics, tools, medical devices, and digital health. While the 56 companies in the 2014 IPO class ended the first half of the year up an average of 19 percent (33 up and 23 down) the 43 therapeutics companies finished the first half of the year up and average of 27 percent (29 up and 14 down).
The sector is benefiting from encouraging clinical results and the approval of new drugs that are making meaningful contributions to improving health outcomes. Although investors’ appetite for life sciences IPOs slowed in the second quarter of 2014, there was still plenty of interest in biotech IPOs. Globally, 10 companies completed offerings in June, raising a total of $674 million in capital. Three drug developers priced upsized offerings above their target range: cancer immunotherapy developer Kite Pharma raised $128 million pricing 30.8 percent (above the midpoint of its target range); hyperkalemia drug developer ZS Pharma raised $108 million (pricing 12.5 percent above the midpoint of its target range); and obesity drug developer Zafgen raised $96 million (pricing 6.7 percent above the midpoint of its target range).
No one expects the run of IPOs to continue at the pace set in the beginning of 2014, but we could see a pick up in offerings after a summer lull. There are 44 companies are in the IPO queue, having filed publicly to complete IPOs on U.S. exchanges in the coming months.
July 06, 2014
http://www.burrillreport.com/article-two_biotechs_price_ipos_taking_deep_haircuts.html
