U.S. biotech Verseon bucks trend by going to U.K. for $100M IPO

Verseon has made the contrarian decision to go public in London. The California biotech opted against listing on Nasdaq in favor of London's AIM, on which it raised $100 million from Neil Woodford and other investors.

The decision to list in the United Kingdom comes at a time when most European biotechs are heading in the opposite direction to tap into Nasdaq's booming biotech market. Verseon CEO Adityo Prakash framed the unusual move as an attempt to ensure the company has backers who are willing to commit to the company for the long term, a model Woodford has espoused in his recently created $1.2 billion Patient Capital Trust.

"We're not ruling out a U.S. listing in future but we're not in a rush to get on the quarterly reporting treadmill that comes with NASDAQ," Prakash told the Financial Times. Companies on AIM are required to report their financial results every 6 months--a less onerous schedule than Nasdaq--but in other regards the U.K. is typically viewed as a far more challenging environment for biotech stocks.

The U.S. has more dedicated biotech investors who understand ups and downs are an almost inherent part of drug development. Nonetheless, San Francisco, CA-based Verseon has persuaded U.K. investors to hand over $100 million in a listing that gives the company a market capitalization of $460 million. The total makes the IPO one of the biggest European biotech listings of 2015, easily topping the $73 million raised by Nordic Nanovector.

Verseon raised the relatively large amount despite being a long way from commercializing a drug. The firm was founded in 2002 by three executives from Pulsent, a tech company focused on video compression that generated some hype more than a decade ago before fading. Prakash and a pair of colleagues have spent the past 13 years applying their computing skills to drug discovery, designing a system to generate virtual molecules and model their interactions with targets.

Many companies are working on similar sounding systems--from Y Combinator-backed Atomwise to Sanofi ($SNY)-partnered Schrödinger--but the field is yet to show it can have as big an effect as its advocates claim. None of the assets generated by Verseon's platform have entered clinical trials yet, with a preclinical anticoagulation program the most advanced candidate in its small, early-stage pipeline.

The IPO gives Verseon the cash to start advancing its programs into the clinic, where its model will be put to the test. "We use computers to design cars and aircraft and buildings, yet in medicines we still use trial and error. We are coming from outside the industry to look at the problem in a new way. Once you know how to intervene in the disease it becomes a physics problem. How do you get a drug to bind to the target like a lock and key?" Prakash said.

- read the FT article