Moderna will be getting all the headlines for its monster $500 million IPO attempt this week, but that shouldn’t overshadow the major $100 million IPO that early-stage Synthorx has just announced, and what this says about the biotech market.
First, to Synthorx: Just a few months back, in the summer, the four-year old, La Jolla, California-based biotech got off a $63 million series C, but now wants a $100 million from an IPO to advance its pipelines of synthetic cytokines, which are designed to improve the efficacy of immuno-oncology treatments without the negative side effects that sometimes come with native cytokines.
Its series C, and the funding it could get out of its IPO, will push Synthorx's lead molecule, Synthorin IL-2 into clinical trials in the first half of next year.
IL-2 (interleukin-2) was discovered decades ago, but the native protein has barriers that preclude its widespread use. For example, before IL-2 activates the immune system, it is immunosuppressive, and so, requires high doses to work.
In a nutshell, Synthorx is looking to make existing cancer therapies work for more people. It thinks its synthetic cytokines could boost the anti-tumor activity of treatments such as checkpoint inhibitors, cancer vaccines, CAR-T therapies and oncolytic viruses.
It plans to trade as $THOR, but it may need to get the hammer down: We’ll have to see whether it will price at the top end of the range, but there is concern that the biotech IPO window, which has been getting wider for a good year now, may be pushing at the hinges, and ready to swing back.
This may be why Moderna, which nearly ran through the whole alphabet for its series raises (which total over $2 billion), decided now was the time for its potentially record $500 million IPO attempt. If it had waited any longer, analysts mused, this may have meant appetite for such a gargantuan offering would not have existed.
This is still a huge number for a company that values itself at around $7 billion, and $100 million for a preclinical biotech also speaks to the IPO market. But biotech is becoming a little less sexy to investors of late in the IPO market, as several biotechs and med tech companies have priced at the lower end of the range.
Investors in general are still nervous: Over the last year, the S&P Biotech has fallen from a high of just over $100 to $76 at its lowest ebb, hovering around $80 this week. The Nasdaq Biotechnology Index has also been a rollercoaster, with a particularly sharp fall in late October after a bumper summer, recovering somewhat in the last few weeks, but sentiment is patchy.
EvaluatePharma analysts are warning this may be evidence of a looming downturn: “Evidence exists to suggest that the biotech IPO market has peaked: the median 'bump' in valuation that companies receive when they move from private to public hands has been in decline since the middle of the year, EvaluatePharma data show. The market sell-off that hit global stock markets in October will have played a role here, but fears are growing that the biotech sector is facing a more prolonged slump.”
We’ll wait and see how the IPO game plays out for Moderna and Synthorx.