Five Biotech IPOs Lead The Way In 2016

Introduction

Healthcare and technology IPOs were by far the most popular IPO sectors in the last twelve months, commanding 62% of the total offerings (healthcare - 41%; technology 21%). These deals raised a total of $6.9 billion (Source: Renaissance Capital). Leading the way were biotech offerings, numbering 26 out of 34 healthcare deals.

As 2016 began, in Q1 the first (and only) deals to successfully price were biotechs: Corvus Pharmaceuticals (NASDAQ:CRVS), Syndax Pharmaceuticals(NASDAQ:SNDX), Proteostasis Therapeutics (NYSE:PTI), AveXis (NASDAQ:AVXS), Editas Medicine (NASDAQ:EDIT), and BeiGene, Ltd. (NASDAQ:BGNE). These were followed by more than thirty offerings after Labor Day across several sectors.

We have closely watched and continue to be particularly bullish on five biotech IPOs: AveXis , Clearside Biomedical (Pending:CLSD), Protagonist Therapeutics (Pending:PTGX), Reata Pharma (Pending:RETA), and bluebird bio (NASDAQ:BLUE). This group has outperformed in an extraordinary sector, and we plan to initiate or build on existing long positions in these companies heading into 2017.

AveXis

AveXis develops and sells novel treatments for patients suffering from rare, life-threatening neurological diseases. AVXS-101 is the company's initial product candidate, which is currently in Phase 1 clinical trials for treating spinal muscular atrophy (SMA) type 1. Q3 results highlighted progress within this trial, including AVXS-101's favorable safety profile. On November 1, 2016, AveXis announced a pivotal study of AVXS-101 in SMA Type 1, which will reflect a single-arm design and rely on the disease's natural history as a comparator.

On 2.10.2016, AVXS offered 4.8 million shares at $20/share, raising $96 million. Lead Underwriters for the deal were Goldman Sachs and Jefferies LLC; underwriters were BMO Capital Markets and Chardan Capital Markets.

We initially liked this Goldman-led deal, following the success of gene-therapy company BGNE . Despite risks of some negative public perception to gene therapies, AveXis possessed novel technology. AVXS returned -9.8% on its first day and surged of 207.4% in the after market.

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Disclosure:  I am/we are long BLUE, AVXS,PTGX,CLSD,RETA.

Disclaimer: I wrote this article myself, and it expresses my own opinions. I am not receiving ...

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