Zentalis pulls off speedy $165M IPO amid pandemic-driven uncertainty

The new coronavirus has injected all kinds of uncertainty into the biotech world, leading companies to delay clinical trials, reorganize their pipelines and hold off on their IPOs. Not so for Zentalis Pharmaceuticals, which priced its IPO at $165 million, eclipsing the $100 million goal it laid out in early March.

Zentalis will use the proceeds to develop ZN-c5, a selective estrogen receptor degrader, for the treatment of ER-positive, HER2-negative breast cancer. The company teamed up with Pfizer in May 2018 to test it alongside Pfizer’s CDK4/6 inhibitor Ibrance and expects to report data from a phase 1/2 study of the combo, as well as ZN-c5 as a single agent, later this year.

It has two other programs in the clinic: ZN-c3, which targets the WEE1 kinase to treat solid tumors, and an EGFR drug for lung cancer. The company aims to move its fourth program, which targets BCL-2 in blood cancers, into clinical trials by the middle of this year.

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Zentalis spent its first few years under the radar, officially launching in December with an $85 million series C round. Just three months later—and two days before the World Health Organization (WHO) officially declared COVID-19 a pandemic—it filed to raise $100 million in its Nasdaq debut. By Bloomberg’s count, Zentalis is the second biotech company to go public in the U.S. since WHO’s declaration.

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It joins Imara, a biotech working on a treatment for sickle cell disease, which began trading March 12, the day after the pandemic was declared. Unlike Zentalis, which outraised its goal by more than half, Imara took a bit of a hit, pricing its IPO at $75.2 million after taking aim at an $86 million listing.

Toward the end of 2019, industry watchers listed a number of factors that might affect the U.S. IPO market in 2020, ranging from the presidential election and changes in interest rates to Brexit and trade tensions between the U.S. and China. A pandemic was not one of them. Now, COVID-19 has “thrown a wrench in what would have been the most active period of the 2020 IPO market,” Renaissance Capital said in a report last month.

It has all but “shut down the spring IPO market,” Renaissance wrote. It now expects a “narrower IPO window in the summer, for companies relatively unaffected by the virus” and for more companies to aim for fall IPOs.