SQZ Biotech, breaking convention, hits the NYSE with $71M IPO

Armon Sharei (SQZ Biotech)

When it’s time to go public, most biotech companies opt for the Nasdaq. Not so for cell therapy-focused SQZ Biotech, which raised $71 million in its New York Stock Exchange debut.

“We didn’t feel bound by convention by how we thought about the exchanges,” SQZ CEO Armon Sharei, Ph.D., said. “Generally, people go to Nasdaq, but we really tried to take a close look at both.”

Various factors went into the company's decision, Sharei said. The IPO comes about a year after the NYSE cut its listing fees, giving companies with little to no revenue—hello, development-stage biotech—a 75% discount.

Financing isn’t the only place where SQZ is going its own way. The IPO proceeds will bankroll a pipeline of cell therapies based on a platform that squeezes cells through a microfluidic chip, disrupting their membranes to get materials into them. It’s working on treatments for various cancers and recently expanded into infectious diseases.

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In cancer treatments, this means engineering patients’ immune cells to present tumor antigens to CD8+, or killer, T cells. In theory, the T cells would then hunt down cancer cells that express the target antigen.

“We feel we have solved some fundamental problems in the cell therapy space and can create cell therapies that people couldn’t in the past,” Sharei said. “Not only are they more impactful across a broader patient set, but they’re also safer and more practical.”

Roche bought into the idea early, inking a partnership worth up to $500 million in 2015 and doubling down three years later with a deal expansion worth $125 million upfront but that could net SQZ more than $1 billion if it meets certain development goals. The alliance covers cancer programs using SQZ’s antigen-presenting cells (APCs), including its lead program, SQZ-PBMC-HPV, a treatment for HPV-positive solid tumors that entered phase 1 (PDF) in January. The study is testing the treatment on its own and in combination with a checkpoint inhibitor.

“What’s been exciting this year is that SQZ is starting to show just how different a cell therapy we can create relative to what’s been done before,” Sharei said.

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For the phase 1 study, the company is making cell therapies from patients’ cells in 24 hours, much faster than the two to three weeks these treatments typically take to manufacture. What’s more, the treatments do not require “pre-conditioning”—a treatment used to clear a path for cell therapies to work but that tends to suppress the immune system—or hospitalization, making them easier for patients to handle.

The IPO proceeds will also bankroll IND-enabling studies for infectious disease programs using the same APC technology as SQZ-PBMC-HPV, starting with hepatitis B, the company said in a securities filing. And it will support the development of treatments based on SQZ’s other technologies, namely cancer treatments using its activating antigen carriers platform and immune tolerance indications, such as Type 1 diabetes, using its tolerizing antigen carriers.

Although SQZ has already ramped up the manufacturing speed of its cell therapies, it aims to go even faster by developing a point-of-care system that can be placed in hospitals.

“Cell therapies are so much more than what they are today, and I think because of the constraints of existing therapies, people have forgotten what a cell therapy could be, rather than what it is,” Sharei said. “Our goal is to take them from where they are to where they should be … If we can bring them to the point of care, we can turn cell therapy into something a patient can walk into a hospital, get treated that day and walk back out.”