Two biotechs, Spero Therapeutics and Allena Therapeutics, are headed for the Nasdaq this morning at valuations they’d been aiming for. Their stock offerings are the latest sign of the health of the biotech IPO market, and the willingness of insiders to make sure these deals succeed.
Spero, of Cambridge, MA, raised $77 million late Wednesday by selling 5.5 million shares at $14 apiece. Allena, of Newton, MA, bagged $75 million by selling 5.3 million shares, also at $14 apiece. Both companies priced their offerings within the ranges they’d previously set. And both had seen insider shareholders express interest in buying a significant portion of their IPOs. SEC filings show that certain Spero backers wanted to buy $30 million, or 39 percent of its IPO. Allena shareholders wanted $25 million, or about 31 percent, of the company’s offering.
IPO research firm Renaissance Capital reported in September that biotechs helped drive up the returns, on average, of the 29 offerings completed during a slow third quarter. The top 10 averaged a 90 percent return during the quarter, led by Ionis Pharmaceuticals (NASDAQ: IONS) spinout Akcea therapeutics (NASDAQ: AKCA) and Cellectis (NASDAQ: CLLS) spinout Calyxt, according to Renaissance. Those results have continued into the fourth quarter, with biotechs like Rhythm Pharmaceuticals (NASDAQ: RYTM), Deciphera Pharmaceuticals (NASDAQ: DCPH), and Nightstar Therapeutics (NASDAQ: NITE) each up at least 10 percent from their October IPOs. Rhythm has seen its share price rise more than 50 percent in its first month of trading.
Renaissance reported that these IPOs continued to be supported by “heavy insider buying,” part of the reason biotech was one of the most active sectors for IPOs in 2016, and still is in 2017.
Spero, which recently won Xconomy’s startup award, is one of the firms trying to provide answers to the growing problem of drug-resistant antibiotics. Through a series of acquisitions and other deals, the company has built an armamentarium of potential bug-killing weapons. Experimental SPR741, for instance, doesn’t destroy bacteria on its own, but instead disrupts the outer membrane of tough-to-drug Gram-negative bacteria so they’re susceptible to antibiotics. SPR994 is a broad-spectrum antibiotic, meaning it can take on several different pathogens.
SPR994 is in Phase 1 testing, while SPR741 could begin a Phase 2 study in 2018. Both drugs are being developed for complicated urinary tract infections. Spero is backed by SR One (17 percent stake before the IPO), Atlas Venture (16.4 percent), GV (13.2 percent), Lundbeckfond (10.4 percent) and others. The company raised $96.2 million since its inception and had $36.3 million cash as of the end of June.
Allena, meanwhile, is developing enzyme-based drugs meant to be taken orally, rather than via injections, for kidney diseases. The company draws its roots from Alnara, a biotech Eli Lilly bought for $380 million in 2010. CEO and co-founder Alexey Margolin also helped form Alnara before the Eli Lilly deal. Alnara has just one drug in clinical testing: ALLN-177, which is being developed as a treatment for hyperoxaluria, a metabolic disease with no approved therapies. ALLN-177 is headed for the first of two Phase 3 trials next year, with data expected in 2019. Allena raised $96 million before its IPO from backers such as Frazier Healthcare (18.5 percent before the IPO), Third Rock Ventures (16.8 percent), Bessemer Venture Partners (14.6 percent), and Fidelity (11.8 percent).