Acelyrin has raised $540 million in an initial public offering, the largest for a biotechnology startup since early 2021 and one of only a handful by young drugmakers this year.
The company said Thursday it sold 30 million shares at $18 apiece, exceeding the projections it set earlier this week. Shares began trading Friday on the Nasdaq stock exhange under the ticker symbol “SLRN,” and rose in value to above $23 apiece through Monday morning.
The pace of biotech IPOs has slowed considerably since 2021, when a record 104 startups flooded Wall Street, according to data compiled by BioPharma Dive. The following year, the number of new stock offerings fell by about 80%. Until this week, only five companies had priced a new offering in 2023, the sector’s slowest start in at least five years.
The value of those offerings has also trended downwards. Prior to Acelyrin’s offering, nine of the last 15 biotech startups that went public raised $15 million or less. With so few companies of late raising more than $100 million in their offerings, “true IPOs” have been few and far between, said Mike Perrone, a managing director at Baird.
Many more companies may be building privately. Investors interviewed by BioPharma Dive over the last year have suggested startups now have to stay private for longer than they did at the market’s peak. Companies looking to gain the support of public investors in 2023 need a clinical-stage asset in their pipeline — the further along, the better, according to Perrone.
“During the go-go days, where multiple companies were going public each week in the biotech market, many were very early — there were plenty of science projects that had yet to be proven,” he said. “The public markets just haven't been comfortable taking that risk.”
Though it’s early and the sample size is small, the numbers may be starting to support that assessment. Nearly two thirds of the companies that debuted in 2020 and 2021 had drugs that were in either preclinical or Phase 1 testing. By comparison, four of the last six startups to go public, including Acelyin, have had drugs at least Phase 2 at the time of their offering. And Acelyrin, whose IPO is the biggest for a venture-backed startup since Sana Biotechnology’s $588 million raise in Feb. 2021, has one in Phase 3.
Headquartered in Agoura Hills, California, Acelyrin was co-founded by Shao-Lee Lin, a former Horizon Therapeutics executive, in 2020. Since then, the company has raised more than $500 million in private funding — including a $300 million Series C round in September — to develop a pipeline of anti-inflammatory drugs.
Acelyrin raised its Series C to support two Phase 3 trials of a drug called izokibep, which is being tested as a treatment for a variety of inflammatory conditions, including psoriatic arthritis. At that time, chief medical officer Paul Peloso hadn’t ruled out an IPO to continue funding Acelyrin’s research, however.
“Now we can just execute and wait for the optimal market dynamics to make the next move,” he said in September.
Acelyrin ultimately chose to quickly follow the IPO of Kenvue, the consumer division of Johnson & Johnson. That offering, which raised $3.8 billion on Wednesday, was seen by industry watchers as a potential catalyst for other companies looking to go public.
“The question every IPO investor, banker, advisor, [venture capitalist] and unicorn is asking themselves: Will Kenvue be the IPO icebreaker that reopens the market?” wrote Bill Smith, the CEO and co-founder of IPO research firm Renaissance Capital, in a note earlier this week.
Startups will be tracking the performance of Acelyrin and Kenvue. If their values hold or increase, it could be a sign the public markets are opening up.
“Once that's established, you’ll start seeing some of the higher quality, well-funded biotech IPOs come out and as those prove out, you'll start seeing a little more movement down the rest of the line,” Perrone said.
Only two of the six companies that priced an offering so far in 2023 have seen gains on their share prices — Genelux, a small cancer drug startup, and Structure Therapeutics, a company developing treatments for metabolic diseases including obesity, according to BioPharma Dive data.
Acelyrin’s lead drug, izokibep, was licensed from Swedish drug developer Affibody. It targets an immune system-regulating protein called interleukin-17A, or IL-17A, the same target as Eli Lilly’s Taltz and Novartis’s Cosentyx. Acelyrin believes the drug may be more potent, and expects results from three different Phase 3 studies in 2023 and 2024, according to its IPO filing.
The company is also evaluating izokibep in axial spondyloarthritis and is developing at least two other medicines for eye and skin conditions.
Editor’s note: This story has been updated to reflect trading through early Monday morning.