Antibiotic player Motif Bio sounds out investor interest in Nasdaq IPO

Motif Bio has appointed an investment bank to look into raising cash in the U.S., potentially through an IPO on Nasdaq. The action, like many taken by European biotechs down the years, was prompted by a desire to tap into the deep pool of capital managed by specialist biotech investors in the U.S., while also trying to close a perceived valuation gap between Motif Bio (LSE: MTFB) and its Nasdaq-traded peers.

Motif Bio CEO Graham Lumsden

London-based Motif Bio listed on AIM in its home city in April, raising £2.8 million ($4.0 million), before tapping investors for a further £22 million months later after an agreement with the FDA about a Phase III trial sparked a surge in its stock price. With shares in Motif Bio up more than 30% since the IPO--despite sliding steadily, along with the rest of the biotech market, since last year's highs--and the company's coffers stocked with the cash of public investors, CEO Graham Lumsden has enjoyed his spell leading an AIM-listed business.

"No complaints, the market's done very well for us," Lumsden told Proactive Investors. Yet, the lure of Nasdaq remains strong. "There's a large pool of capital available in the U.S. and there are some very technically sophisticated and specialist investors," Lumsden said. Motif Bio has been weighing up the benefits of going after these investors for at least the past 6 months, but the appointment of investment bank MTS Health Partners represents an escalation of the strategy. MTS will put Motif Bio in front of buy-side players and help design a strategy to part investors from their cash.

If Motif Bio goes ahead with an IPO, it will join a small cadre of clinical-phase antibiotic developers on Nasdaq. This is part of the attraction. "If you look at our peer companies, companies that also have antibiotics in development at a similar stage to iclaprim for Motif … they're listed on Nasdaq," Lumsden said. Lumsden picked out Cempra ($CEMP) and, particularly, Paratek Pharmaceuticals ($PRTK) as Nasdaq-traded biotechs in Motif Bio's peer group. Paratek has a market cap north of $275 million. Motif Bio is barely breaking $60 million.

Other European biotechs, notably gene therapy player uniQure ($QURE), have viewed the lack of comparable companies trading on exchanges in their home continent as a barrier to receiving a fair valuation anywhere other than the biotech-dense Nasdaq.

- read the statement
- watch Proactive Investors' interview