The window for life science IPOs is still open, and five biotechs and one medical device company chose the last week of the third quarter to make their stock market debuts. Gritstone Oncology (NASDAQ: [[ticker:GRTS]]) closed out the week by raising $100 million in an upsized IPO.
On Thursday night, Emeryville, CA-based Gritstone priced its offering of 6.6 million shares at $15 apiece. The cancer drug company had planned to sell 6 million shares in the range of $13 to $15 each. According to its prospectus, Gritstone will use up to $25 million of the IPO cash to fund a Phase 1/2 clinical trial for its lead drug candidate, a personalized immunotherapy called Granite-001. Between $15 million and $18 million is earmarked for continued construction of a manufacturing facility, and as much as $15 million will be set aside for more research and development. Gritstone’s shares are expected to begin trading on the Nasdaq later today.
It’s been a strong year for IPOs broadly, and healthcare specifically. According to IPO research firm Renaissance Capital, healthcare companies accounted for 58 of the 184 IPOs that have priced in 2018. Here’s a roundup of the rest of the week’s life science IPOs.
—Entasis Therapeutics (NASDAQ: [[ticker:ETTX]]) kicked off the week’s activity on Tuesday with a $75 million IPO. The Waltham, MA biotech priced its offering of 5 million shares at $15 apiece, which was below the targeted $16 to $18 per share range. Entasis’ stock price is off to an inauspicious start. On Thursday, shares closed at $10 each. The AstraZeneca (NYSE: [[ticker:AZN]]) spinout said it would use $50 million of its IPO cash to finance clinical studies for lead drug ETX2514, which was developed to treat infections that have become resistant to antibiotics. The company has encouraging preliminary data from a Phase 2 study testing the drug in complicated urinary tract infections. According to the Entasis prospectus, a Phase 3 study is expected to start in the first quarter of 2019, which will test the drug on Acinetobacter baumannii infections resistant to the broad-spectrum antibiotic carbapenem.
—Arvinas (NASDAQ: [[ticker:ARVN]]) upsized its IPO on Wednesday, selling 7.5 million shares at $16 each. The company had initially planned to sell 6.6 million shares in the $14 to $16 per share range. The New Haven, CT, biotech raised $120 million, which it will apply to its “protein degradation” drugs, which aim to treat disease by harnessing the process that cells use to get rid of harmful proteins. Arvinas plans to start clinical trials next year, testing drugs for prostate and breast cancers. Shares of Arvinas closed the first trading day at $16.05.
—Ra Medical Systems (NYSE: [[ticker:RMED]]) sold 3.9 million shares Wednesday at $17 apiece in an upsized IPO. The company had planned to sell 3.3 million shares in the range of $14 to $16 each. The Carlsbad, CA, medical device company has a laser and disposable catheter system called Dabra that is FDA cleared to treat vascular blockages. Ra Medical also sells the Pharos Excimer Laser, which is cleared to treat chronic skin diseases. Ra Medical reported $5.8 million in 2017 revenue. According to the prospectus, the company plans to use $21 million of the IPO cash to expand sales and marketing, and $14 million for clinical studies to support expansion of its technology to more applications and to develop new products. Shares of Ra Medical closed at $20 apiece on the company’s first day of trading.
—Sutro Biopharma (NASDAQ: [[ticker:STRO]]) raised $85 million in its IPO. The South San Francisco, CA, cancer drug developer sold 5.7 million shares for $15 each, right in the middle of its targeted $14 to $16 per share range. There’s an ownership twist in Sutro’s IPO. The maker of protein-based drugs once was tied at the hip to Celgene (NASDAQ: [[ticker:CELG]]), with a possible acquisition looming. But Celgene declined an option to acquire in 2017. (It still holds rights to four Sutro experimental programs and a 10.5 percent pre-IPO stake.) Sutro’s latest pharma friend is now Merck (NYSE: [[ticker:MRK]]), which had a 12.5 percent stake in Sutro going into the IPO and bought 10 million more in Sutro shares at the IPO price. Merck can go no higher than a 17.5 percent ownership, according to Sutro’s filings. Sutro and Merck entered a licensing deal earlier this year. Sutro says in its filings that it plans to use up to $40 million for cancer drug STR0-001, which is in a Phase 1 study as a treatment for multiple myeloma and non-Hodgkin lymphoma. On Sutro’s first day as of trading, the company’s stock price closed at $15.20.
—Urovant Sciences (NASDAQ: [[ticker:UROV]]) priced its IPO at $14 per share, which was the low end of its projected $14 to $16 per share range. The Irvine, CA, company sold 10 million shares, raising $140 million. Urovant’s lead drug, vibegron, is a once-daily pill developed to treat overactive bladder. Urovant is currently testing the drug in a 1,400-patient Phase 3 study that is expected to report preliminary results in the first half of 2019. Depending on those results, Urovant plans to apply for FDA approval by early 2020, the company says in its prospectus. Shares of Urovant closed at $11.65 Thursday, down 16.7 percent from the IPO price.
The biotech IPO wave will carry into the fourth quarter. Eye drug developer Kodiak Sciences of Palo Alto, CA, and Guardant Health, a liquid biopsy company based in Redwood City, CA, are expected to price their IPOs next week, and a number of other companies remain in the queue.
Alex Lash contributed to this report.
Photo by Nasdaq
