[Updated 4/15/15, 7:14pm. See below.] Aduro Biotech (NASDAQ: [[ticker:ADRO]]) kept the immunotherapy bulls running Wednesday after raising $119 million in its initial public offering.
Berkeley, CA-based Aduro sold 7 million shares at $17 apiece, a price that has more than doubled in its first trading day on the Nasdaq, pushing past $38 in late trading. [Update: Its shares closed Wednesday at $42, a gain of 147 percent. This story’s headline has been changed to reflect the closing price.] Aduro’s most advanced product, a cancer immunotherapy treatment, is in mid-stage clinical trials for pancreatic cancer. The debut comes soon after the launch of a cancer immunotherapy stock index, created by an independent investor to gain a clearer picture of the value of biotech’s hottest sector. Aduro isn’t yet part of the index, but its direct competitor Advaxis ((NASDAQ: [[ticker:ADXS]]) is. Advaxis shares have fallen 12 percent today.
Two other biotechs debuted today. Cidara Therapeutics (NASDAQ: [[ticker:CDTX]]) of San Diego sold 4.8 million shares at $16 apiece and 45 minutes before market close was trading up slightly at $16.05 a share. Xbiotech (NASDAQ: [[ticker:XBIT]]) of Austin, TX, raised $76 million, selling 4 million shares at $19 each.
Both Aduro and Cidara hit or exceeded their intended marks with their IPOs, a sign that the bankers who usher companies to the IPO altar have not overestimated market demand. It’s another data point for the debate over biotech’s bull run and how it might come to an end. If anything, Aduro did slightly better than its expected range of $14 to $16 per share. Cidara, formerly known as K2 Therapeutics and founded three years ago in Boston, was aiming to debut in the range of $14 to $16 a share.
Xbiotech used a more unusual IPO method. Known as a “best efforts” offering, it had set its sights on specific sales terms early in the process and instructed its bankers to find as many willing buyers as possible. If the bankers weren’t able to meet the target, the offering would have been called off, according to Xbiotech’s regulatory filings. Its shares were up 24 percent to $23.61 in the last hour of trading.
There were other notable aspects to today’s IPOs. In an odd bit of timing, Aduro locked down a significant partnership only two weeks before it went public.
Novartis said it would pay Aduro $250 million up front to co-develop drugs that stimulate the immune system to fight cancer. The size of the deal was unusual, because the type of immunotherapy, called STING—stimulator of interferon genes—hasn’t yet been tested in humans. Its lead program uses a nontoxic version of the bacterium Listeria, engineered to mimic certain proteins on tumor cells. When the patient’s immune system gobbles up the Listeria, immune cells focus their attack on the tumor cells that bear the same proteins. As it signaled in the run-up, Aduro also sold $25 million in stock at $17 a share to Novartis (NYSE: [[ticker:NVS]]).
Cidara’s IPO also marks a certain leap of faith in untested biotech programs. The antifungal drug maker’s lead product has yet to reach human trials. The IPO marks the second for Cidara CEO Jeffrey Stein, who guided antibiotic developer Trius Therapeutics, also of San Diego, to an IPO in 2010—under more difficult circumstances—and later a $707 million acquisition by Cubist Pharmaceuticals. The cash will help Cidara advance its anti-fungal products, including lead candidate CD101, as both an intravenous treatment for systemic fungal infections and a topical treatment for vaginal yeast infections.
Aduro still has the chance to sell 1.05 million more shares through its bankers in the next 30 days. Cidara’s bankers have the option to sell 720,000 additional shares.
