Two biotechnology companies, VectivBio Holding and Reneo Pharmaceuticals, made their market debuts on Friday. VectivBio’s stock rose 43% while Reneo dropped below its offer price.
Last year, biotech emerged as one of the busiest sectors of the IPO market. There were 102 healthcare initial public offerings last year, valued at $24.8 billion. Of the 102, three-fourths were biotechs, raising $20.1 billion. This year, there have been 40 healthcare offerings—including biotechs—in the first quarter, representing about $8.7 billion, Dealogic said.
In addition to both being biotechs, VectivBio and Reneo share two other things: Both are trading on the Nasdaq and both are unprofitable.
First up is VectivBio (ticker: VECT), which collected nearly $128 million. The Swiss company sold 7.5 million shares at $17, the midpoint of its $16 to $18 price range. BofA Securities, SVB Leerink, and Credit Suisse are the underwriters on the deal.
Shares of VectivBio rocketed nearly 122% before dropping. The stock opened at $22.82, and peaked at $37.70. It closed Friday at $24.23, up nearly 43% from its offer price.
Pfizer (ticker: PFE) acquired Therachon Holding in 2019 and spun off VectivBio into a separate company. VectivBio is developing treatments for rare gastrointestinal, or GI, disorders. Its product candidate, apraglutide, is used to treat short bowel syndrome, or SBS.
VectivBio chose to go public right now because it’s nearing the stage where it wants to build a commercial enterprise, said
Luca Santarelli, M.D.
, VectivBio’s founder and CEO. “We also have a vision to expand our pipeline and we think the public markets are a better vehicle to expand the company,” said the CEO, who spoke to Barron’s from Basel, Switzerland.
The biotech plans to use proceeds from the IPO to develop its drug, apraglutide. “We’re planning to commercialize it ourselves,” Santarelli said. “We’ll be focusing on the U.S. and Europe and looking for partners in the rest of the world.”
The company doesn’t generate revenue. Losses widened to nearly $60 million for the year ended Dec. 31 from $23.5 million in 2019, its prospectus said.
VectivBio currently employs about 30 people and will be hiring, Santarelli said. He expects the company to number 50 people by the end of 2021 and, in two-and-a-half-years, to have 80 to 90 employees .
“For some reason, the market is welcoming companies with true potential to become medicines,” Santarelli said.
Reneo (RPHM), the other company to make its debut Friday, turned in a muted performance Friday. Reneo’s stock opened at $15.30, hit a high of $17.18, and then dropped. It closed at $13.89, off 7.4% from its offer price, making Reneo a broken deal.
The company raised about $94 million after selling 6.25 million shares at $15, the bottom of its $15 to $17 price range. Jefferies, SVB Leerink, and Piper Sandler are the underwriters on the deal.
Reneo is developing therapies for patients with genetic mitochondrial diseases, which occurs when structures that are supposed to produce energy for a cell don’t work. Its lead product candidate, REN001, completed an open-label Phase 1b clinical trial in patients with primary mitochondrial myopathies, or PMM. Patients with PMM often report chronic fatigue or a lack of endurance.
Losses for Reneo widened to $19.5 million for the year ended Dec. 31 from $12.4 million in 2019, its prospectus said. Reneo hasn’t generated any revenue. It has 23 employees.
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