- Pliant Therapeutics, a developer of fibrosis drugs, on Tuesday raised $144 million through an initial public offering, becoming the 15th biotech to start trading shares on Wall Street this year.
- Pliant's IPO keeps biotech close to its 2019 pace, a telling statistic given the coronavirus pandemic has thrown public markets into turmoil since early March. IPO activity has shown signs of picking up, too, with multiple biotechs either recently filing offerings or closing in on pricing them. Chinese firm Legend Biotech could hold the sector's biggest IPO of the year on Thursday.
- The IPO market is a critical bellwether for the health of the biotech industry. An "open window" for IPOs gives startup biotechs and their venture backers confidence they can win the support of broader groups of investors, and at least thus far, biotechs have proven that's possible in a turbulent 2020.
In an April report, IPO research firm Renaissance Capital said public offerings were "stopped cold by the coronavirus meltdown." That threatened what has been a historic multi-year boom for biotech IPOs — a run that, in turn, has flooded venture firms with cash to form new startups.
Securities lawyers interviewed by BioPharma Dive in early March predicted a "temporary pause" in the market as companies and their investors assessed the damage.
But biotech offerings have remained "surprisingly resilient," wrote SVB Leerink analyst Geoffrey Porges, in a research note in April. Eight biotechs had raised $1.3 billion through the first quarter, even as the broader markets slumped. Healthcare offerings, largely biotechs, had accounted for half of all of the quarter's IPOs, Renaissance Capital wrote.
Positive signs continue to emerge. Though only one IPO closed in March, six followed in April and May, and all seven currently trade at or above their IPO price. ADC Therapeutics raised $233 million in its offering and has since seen its shares nearly double in price. Zentalis Pharmaceuticals stock has almost tripled. By the end of May, there had been 14 IPOs in the biotech sector, close to last year's pace of 17 through the first five months of 2019.
"It just means to me that people continue to see this sector as one that's worthy of investing and that you see good returns," Jon Norris, a managing director in SVB's Healthcare Practice, recently told BioPharma Dive. "If you see good returns, people are not going to be quick to exit the market."
Indeed, more biotechs are entering the market. Since late May, several other venture-backed biotechs have made their IPO intentions known. Among them: gene therapy developer Generation Bio, protein degradation startup Repare Therapeutics and vaccine maker SutroVax.
Four others are on tap this week, led by Legend Biotech, which, with a planned $350 million raise, could land the sector's largest offering to date this year. Legend developed a multiple myeloma cell therapy, since licensed to Johnson & Johnson, that may challenge a front-running product from Bluebird bio and Bristol Myers Squibb.
If all four follow through and go public, this year's biotech IPO count will be pushed to 19, matching the total reached on June 20 last year.
SVB's Norris predicts a "wave" of IPOs will occur in June, as biotechs that had waited for the market volatility to subside complete their updated financial statements. They're all capitalizing on a sentiment that is helping to carry biotech through the outbreak: the advancement of drugs and vaccines that could curb the spread of COVID-19.
"Life sciences is perceived as being at the forefront of dealing with this horrible pandemic," Norris said, "so people are putting a lot of their money into this area."
Pliant, meanwhile, is one of newer group of companies trying to build on new insights into the role of surface proteins called integrins. Drugs that block integrins, like the multiple sclerosis drug Tysabri and the inflammatory bowel disease treatment Entyvio, are well-known. But some come with serious side effects, and all are infused, limiting their use. Pliant's lead drug is an oral integrin blocker that's soon to enter Phase 2 testing in idiopathic pulmonary fibrosis.
Novartis, which partnered with Pliant on a potential treatment for nonalcoholic steatohepatitis, agreed to buy $10 million in shares in a concurrent stock offering.
Jacob Bell contributed reporting.