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UPDATED: Bluebird IPO busts out, raises $101M as biotech offerings turn red hot

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Biotech IPOs are officially back in vogue. Bluebird bio--set up to develop new gene therapies for orphan diseases--priced its IPO at $17 a share on Tuesday, actually above its range. The biotech raised $101 million after bumping up the number of shares it had on offer. And this morning the stock gyrated up 50%, nearing $26 a share--a biotech event that hasn't been witnessed in years.

Just a few weeks ago bluebird ($BLUE) set its range at $14 to $16 a share, with plans to sell off 5 million shares with an eye to raising about $75 million in total. But it added nearly a million shares to the tally and bumped up the price, something that would have been almost unimaginable just a few months ago.

Nick Leschly, CEO of bluebird bio

Regular readers of FierceBiotech should have no trouble recalling bluebird. The 2012 Fierce 15 company raised an estimated $134 million. The Third Rock creation--CEO Nick Leschly was part of the Millennium mafia that booted up the venture group--scored proof-of-concept data for adrenoleukodystrophy, or ALD. And then bluebird quickly shifted gears, focused on a late-stage study. The venture group that backs bluebird also includes Arch Venture Partners, Forbion Capital Partners, RA Capital Management, TVM Capital and some undisclosed investors. Third Rock owned 28% of the company ahead of the IPO.

After the financial crisis of 2008, most general investors turned a cold should to biotech IPOs, unhappy with the heavy risk involved in drug development. That cold front lasted for 5 long years, creating problems for venture groups unable to cash out and forcing a general tightening of the money spigots, inspiring a far more austere budgeting process that forced everyone to get more focused on assets and lean staffs. But since the beginning of the year there's been a growing queue of biotechs lining up at the newly open IPO window, and bluebird's news is bound to inspire more such offerings.

One of the most remarkable aspects about bluebird is that it still has only a lean portfolio of data to rely on. Like most biotechs, it's awash in red ink and still has a perilous journey ahead of any FDA filing. But everything that would have proved the kiss of death last year warranted a big embrace today.

Prosensa will be in the next wave of biotech IPOs to test the market's appetite. Yesterday the European company set its range at $11 to $13 a share, looking to raise around $60 million for its pivotal-stage therapy for Duchenne muscular dystrophy. Prosensa is partnered with GlaxoSmithKline and is racing against Sarepta, which has reported impressive early-stage data on a competing therapy looking for an early approval from the FDA. Also, Iroko filed to go public as well, looking for $145 million in additional support of its NSAID drug portfolio. 

Of course, now that the market has opened its arms to biotech, there's a growing fear that the go-go feeling won't last forever. Now the big question is how long the good times can last before the market turns sour again.

- here's the press release
- see the report from Renaissance Capital

Special Reports: bluebird bio – 2012 Fierce 15 | Top 10 biotech IPOs of 2012

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