Acacia postpones £150M IPO as London market for big listings dries up

Acacia Pharma has become the latest company to decide now is the wrong time to go public in London. Less than two weeks after Shield Therapeutics pulled the plug on its £110 million ($170 million) IPO, Acacia has backed away from its plan to raise £150 million by listing on the London Stock Exchange.

Acacia Pharma CEO Julian Gilbert

Cambridge, United Kingdom-based Acacia, in a statement that echoed the one released by Shield, cited "volatility and uncertainty in global equity markets" as the reason for hitting pause on its IPO ambitions. The statements suggest that while the window for life science IPOs in London has yet to shut completely--Evgen Pharma raised £7 million the day Acacia canned its plan--it has become much harder to persuade investors to part with large sums of money. For Acacia, this shift has pushed it back into the arms of its existing financiers.

"We will continue to work with our existing investors to execute the key elements of our strategy," Acacia CEO Julian Gilbert said in a statement. The main tasks facing Acacia relate to the progress of its two most advanced pipeline programs, treatments for postoperative and chemotherapy-induced nausea. Acacia wanted the £150 million to support late-phase trials of both assets, a regulatory filing with the FDA for the postoperative program and the building out of its U.S. commercial infrastructure. Like Shield, Acacia is now relying on private investment for near-term aspects of its strategy.

The relatively derisked pipelines of Acacia and Shield looked well suited to the task of parting the London investment community from their cash. That both Acacia and Shield failed to do so suggests the conditions that enabled Circassia (LSE:CIR) to pull off its monster IPO are gone, at least for now. When Acacia first filed to go public, Gilbert told The Financial Times support from both specialist and generalist investors was expected. In the weeks that followed, debates in the U.S. about controlling drug prices led to generalists' enthusiasm for biotech waning and cash pouring out of the market.

Such debates may ultimately have very little bearing on whether Acacia or Shield proves to be a solid investment. But for some readers of the biotech tea leaves, it is of little surprise that the London IPO market has suffered. At the FierceBiotech Executive Summit: London, which took place between the announcements by Shield and Acacia, Polar Capital Fund Manager Gareth Powell predicted the market for biotech IPOs would shut down until after the U.S. election. And F-Prime Capital Partner Alex Pasteur said the U.K. will be hit hard by a downturn in the U.S. biotech market.

What is less clear, at this stage, is what British biotechs will do in the absence of even a stuttering home IPO market. With the notable exception of Immunocore, large private financing rounds are a rarity in the U.K., leaving Nasdaq--with all the current uncertainty and inherent complications that entails--as one of the few available options.

- read the release
- and Reuters' take