Two Days, Six IPOs, and $1B Raised for Biotech Research & More

Summer’s arrival hasn’t slowed the momentum of the biotech IPO market. Wall Street this week welcomed six new life science industry companies, which collectively raised more than $1 billion in their stock market debuts.

Relay Therapeutics (NASDAQ: [[ticker:RLAY]]) notched the biggest biotech IPO of the week, raising $400 million. Investor interest in the Cambridge, MA-based company was so strong that the company was able to boost the deal size three times. Last week, the company set a target of 14.7 million shares priced in the range of $16 and $18 each. On Tuesday, the company revised those terms, keeping the price range but increasing the number of shares to 16.9 million. By Wednesday, the company increased the proposed offering to 20 million shares priced at between $18 to $19 each. Relay ended up pricing the IPO at $20 per share and then watched those shares pop 74 percent Thursday, the company’s first day of trading.

Relay’s “Dynamo” technology uses computational techniques to study “protein motion,” which is the way that proteins change shapes in states of health and disease. Analysis of these shapes helps the company develop targeted cancer drugs that address difficult-to-hit targets.

The most advanced Relay compound, RLY-1971, is designed to hit a cancer target called SHP2. In the first quarter of this year, the company began a Phase 1 study testing the drug in patients with advanced solid tumors. A second compound, RLY-4008, is designed to block another cancer protein, FGFR2. The company expects to begin a Phase 1 study for that compound in the second half of this year, testing it in patients whose advanced solid tumors have FGFR2 alterations. Relay says in its prospectus that it intends to use $100 million to $120 million for Phase 1 and Phase 1b tests of RLY-1971, and for a portion of Phase 2/3 clinical trials. The company plans to spend another $130 million to $155 million for Phase 1 tests of RLY-4008, as well as a portion of Phase 2/3 tests. The rest of the IPO cash is earmarked for research and development of earlier-stage programs.

Here’s a look at the five life science IPOs that priced Thursday night:

—Pandion Therapeutics (NASDAQ: [[ticker:PAND]]) pulled in $135 million to advance its pipeline of experimental therapies for autoimmune diseases. The biotech offered 7.5 million shares for $18 apiece, which was the top of its projected price range.

Watertown, MA-based Pandion is developing alternatives to current therapies that treat autoimmune disease by suppressing one pathway of the immune system, which leaves patients with chronic, residual effects of their disease or a worsening of the condition. The company says in its prospectus that its proprietary “TALON” technology develops drugs that act at points of the immune system called control nodes, “which we believe will enable us to design and develop treatments for autoimmune diseases that provide a durable clinical benefit.”

Pandion’s lead drug candidate, PT101, is designed to expand regulatory T cells, the type of immune cells that tamp down immune system activity. The company says its drug achieves this without activating inflammation-triggering cells, such as T cells and natural killer cells. The drug is currently in a Phase 1a study testing it in moderate-to-severe ulcerative colitis. Final data are expected in the first half of next year. Pandion says it will apply $55 million of the IPO cash toward clinical development of PT101, and $38 million of the proceeds toward the preclinical and clinical development of two earlier-stage compounds.

—Berkeley Lights (NASDAQ: [[ticker:BLI]]), a company whose cell analysis technology is used to discover and develop biological therapies, raised $178.2 million in an upsized IPO. The Emeryville, CA-based company sold 8.1 million shares for $22 apiece. The company initially planned to offer 7.4 million shares in the range of $16 to $18 each, then revised that range to $19 to $20 per share.

The self-described “digital cell biology company” reported having 45 total customers at the end of last year, including eight of the 10 largest biopharmaceutical companies as measured by revenue. Other customers include biotechs, contract research organizations, synthetic biology companies, and academic institutions. Berkeley Lights reported $56.7 million in revenue for 2019, a more than 81 percent increase compared to the prior year. It plans to use the IPO cash for general corporate purposes, including research and development, as well as sales and marketing.

—Renalytix AI (NASDAQ: [[ticker:RNLX]]) already trades on the Alternative Investment Market (AIM) of the London Stock Exchange. The developer of AI-based diagnostics tests for kidney disease now has a US stock market listing. Cardiff, Wales-based Renalytix raised $74.3 million from its offering of more than 5.4 million American depository shares priced at $13.50 each. At the same time, it sold 30,000 shares to investors outside of the US at £5.37 (about $6.75) apiece.

The Renalytix diagnostic technology, KidneyIntelX, uses AI to crunch data and produce a risk score that predicts the progression of a patient’s kidney function decline. The technology was developed for patients who have type 2 diabetes and chronic kidney disease. Renalytix says in its prospectus that its kidney risk scores are intended to help physicians and health systems make treatment decisions.

KindneyIntelX is not yet commercially available but Renalytix is betting the US market will be receptive. Chronic kidney disease affects about 37 million Americans and leads to $120 billion in Medicare spending annually, the company says in the filing. The company says it plans to use between $25 million and $30 million of the IPO proceeds for KidneyIntelX’s continued development and planned commercialization.

—ALX Oncology (NASDAQ: [[ticker:ALXO]]) raised $161.5 million from its upsized IPO, pricing its offering of 8.5 million shares at $19 apiece. The Burlingame, CA-based company initially planned to sell 8 million shares priced in the range of $15 to $17 each.

ALX is among the companies developing drugs that block CD47, a protein on the surface of cancer cells that signals to immune cells “don’t eat me.” Blocking this protein allows immune cells called macrophages to gobble up the tumors. CD47 is also expressed on healthy cells, so blocking it can set immune cells loose on noncancerous tissue. ALX aims to avoid that. Lead ALX drug candidate ALX148 is a fusion protein designed to specifically target a CD47 receptor on myeloid cells.

ALX148 is currently in early-stage testing in head and neck squamous cell carcinoma and gastric/gastroesophageal junction carcinoma. The company plans to use the IPO proceeds to complete that Phase 1b study and to start clinical trials testing the drug in myelodyslplastic syndromes and acute myeloid leukemia.

—Deerfield Healthcare Technology Acquisitions, a “blank-check” company whose purpose is to merge with a private company seeking a public listing, raised $125 million. It priced its offering of 12.5 million “units” at $10 apiece. A unit represents a share of Class A common stock and one-fifth of a warrant that can be redeemed for additional shares at the price of $11.50 each. The Class A shares are trading on the Nasdaq under the stock symbol “DFHT,” while the warrants trading under the symbol “DFHTW.” The company was formed by Deerfield Management, a healthcare investment firm that is oversees more than $10.5 billion in assets.

Image: iStock/MBPROJEKT_Maciej_Bledowski