The IPO window remains wide open for biotechs. Two more, Kiniksa Pharmaceuticals and Scholar Rock, make their Wall Street debuts this morning having raised $227 million combined in their IPOs last night.
Kiniksa exceeded its funding goals. The Lexington, MA, company sold 1.44 million more shares than it projected, or 8.44 million total, at $18 apiece, to bag $152 million. Scholar Rock, of Cambridge, MA, priced within its projected range, raising 5.36 million shares at $14 apiece. Kiniska thus makes its debut with a $905 million valuation; Scholar Rock is worth $350 million, according to IPO research firm Renaissance Capital. Kiniksa and Scholar Rock will trade on the Nasdaq today under the ticker symbols “KNSA” and “SRRK,” respectively.
For Kiniksa, the IPO will help push forward a pipeline of drugs that were originally discovered elsewhere. The furthest along, for instance, is rilonacept (Arcalyst), which is already approved to treat the rare disease cryopyrin-associated periodic syndrome and was developed by Regeneron Pharmaceuticals (NASDAQ: REGN). Through a deal with Regeneron, Kiniksa has partial rights to the drug and is advancing it for recurrent pericarditis, an inflammatory disease that affects the tissue surrounding the heart. A Phase 2 study is underway, which could lead to a late-stage trial this year if all goes well. Kiniksa would split the profits with Regeneron if the drug makes it to market for pericarditis.
A second Kiniksa drug, mavrilimumab, comes from AstraZeneca’s MedImmune unit. MedImmune planned to test the drug in rheumatoid arthritis, but human trials never began in the U.S. because of safety concerns in preclinical studies (they have proceeded elsewhere). Kiniksa is targeting giant cell arteritis, an inflammation of the blood vessels of the scalp that occurs mainly in the elderly. It hopes to begin a Phase 2 study of the drug this year. In its IPO prospectus, however, Kiniksa cautioned the FDA has to first agree the drug has “an acceptable risk/benefit” before testing can start.
Kiniksa also has drug candidates licensed from Biogen (NASDAQ: BIIB), NovoNordisk (NYSE: NVO), and Primatope Therapeutics. Its CEO is Sanj Patel, who founded Synageva BioPharma, which Alexion Pharmaceuticals (NASDAQ: ALXN) bought for $8.4 billion in 2015. (As has been widely reported, however, the deal turned out terribly for Alexion.)
Scholar Rock, meanwhile, is developing antibody drugs that tweak growth factors—important proteins involved in a number of physiological processes—in an unusual way. Its first candidate is SRK-015, which is meant to spur muscle growth. Scholar Rock is testing it in the rare neurological disease spinal muscular atrophy, but doesn’t have any human data yet. Its first studies will begin this year.
There is already one approved drug for SMA, Biogen’s nusinersen (Spinraza). An SMA gene therapy from AveXis is in late-stage testing. Scholar Rock believes SRK-015 could be used as a monotherapy or alongside other drugs like nusinersen.
Wall Street remains open to biotechs. Including the 12 biotech IPOs between January and March, there have now been at least 10 such IPOs in each of the last four quarters, according to a recent report from Renaissance Capital. No biotech IPO in the first quarter priced below its projected range, though there have been mixed returns since. Eli Lilly (NYSE: LLY) bought Armo Biosciences (NASDAQ: ARMO), for instance, for $50 a share just four months after it went public at $17. But shares of Menlo Therapeutics (NASDAQ: MNLO) are worth around half their IPO price thanks to a clinical setback just two months after going public.
As has been the norm in biotech for some time, insider stockholders continue to aid biotech IPOs—the average biotech had almost 25 percent of its IPO bought by insiders, according to the Renaissance report. Kiniksa continues the trend. Insiders had indicated plans to buy 40 percent of its IPO, an SEC filing shows.