Quarterly IPOs Climb Back Above $1bn

Stock market listings were back on the upswing last quarter, with the eight biotechs floating on Western exchanges raising a total of $1.1bn. In fact, there seems to have been a bit of a rush: three companies listed on the same day in mid-September, and the IPO queue is also looking healthy.

While this is a gratifying increase from the second quarter, it is still a worse showing than in the first three months of 2024, and way off the pandemic-era highs in this sector.

The biggest deal of the period was Zenas BioPharma’s $225m NASDAQ debut, which was greeted with modest enthusiasm in the shape of a 7% share price rise on the first day of closing. The company has a single clinical asset, a bispecific antibody called obexelimab, which it is developing for autoimmune diseases including immunoglobulin G4-related disease (IgG4-MD). This is a chronic fibroinflammatory condition which can affect numerous organs and can cause irreversible organ damage with or without the presence of symptoms.

Zenas’s IPO proceeds will help fund a Phase III trial of obexelimab, which targets CD19 and FcγRIIb, in IgG4-MD and a Phase II study in warm autoimmune hemolytic anemia. Since floating, Zenas’s shares have fallen in value, though by less than 1%.

Zenas’s performance has arguably been overshadowed by the two other biotechs that went out on the same day – MBX Biosciences, Inc. and Bicara Therapeutics . Though these raised lower amounts, their share prices popped immediately, and both had already priced at a premium. It likely helps that they are active in the hot areas of metabolic disease and cancer, and, like Zenas, have at least one candidate in mid- or late-stage trials. (Also see "MBX, Zenas And Bicara IPOs Generate Big First Day Returns, But Will They Last?" - Scrip, 16 September, 2024.)

MBX and Bicara ended the quarter up by 62% and 42%, respectively – the best performances of the period.

At the other end of the scale, OS Therapies, LLC and Kairos Pharma, Ltd. used flotations to raise tiny sums – just $6m each. In some ways doing a deal like this is an odd decision; IPOs are expensive and a US-based listing comes with obligations to investors and the Securities and Exchange Commission (SEC) that private companies can swerve.

Perhaps fearing that these groups had rushed towards an IPO before they were strictly ready, investors shied away from OS and Kairos, and both were trading down markedly by the end of September.

Four more biotechs have filed to go public within the past month. (Also see "Finance Watch: Biopharma IPO Queue Grows As Market Conditions Improve" - Scrip, 4 October, 2024.) Septerna, Inc. and Upstream Bio are both aiming to raise $100m, though this is sometimes used as a placeholder amount on SEC filings. CAMP4 Therapeutics intends to content itself with $75m, and Apimeds is seeking $12m, undaunted by the falling valuations of other smaller IPO stocks.

Jefferies analysts wrote in a 1 April note that there was a backlog of private companies from 2021-23 that venture investors have funded but that had not yet gone public. Evaluate Pharma data back this up: 116 companies have raised VC rounds of more than $100m since the start of 2023, 101 of which are still private. Many of these might be good candidates for IPOs, so it is possible that more deals remain to be done.

That said, investors’ eagerness for new offerings can be gauged to some degree through the premiums at which floating companies feel able to price, and the trend here still makes for uncomfortable reading. Actuate Therapeutics, Inc. was forced to price its offering at an 11% discount to its preannounced range, dragging the average for the quarter down to a 2% overall discount. The IPO window can only truly be said to have opened when this figure climbs well into the positive.