Biotech companies with IPOs of at least $50 million in the past three years have averaged an increase in share price of more than 42%. Gainers outpaced decliners by a ratio of two to one, according to an article in BioPharma Dive.
After wallowing for years, the appetite for biotech IPOs began to kick into high gear in 2013, when the fledgling pharma companies became new darlings of investors drawn to their potential for scientific breakthroughs. Ever since, biotechs have been on a roll and are gaining valuations never imagined in the 2000s. Despite the pandemic, their IPOs are setting new records.
At the top of the list of gainers over the past three years is Kodiak Sciences Inc. (KOD), whose market value has skyrocketed 859% since the company went public in October 2018. The Palo Alto, California-based firm currently trades at about $96 per share, adding roughly $30 since the beginning of this year.
Kodiak's research is aimed at developing drugs for retinal diseases. Its most advanced treatment is KSI-301, which is in phase 2/3 trials for wet age-related macular degeneration, diabetic macular edema, retinal vein occlusion and diabetic retinopathy.
Kodiak ended the second quarter of 2020 with $417.1 million of cash, cash equivalents and marketable securities. Based on the company's current cash position, I estimate it should have sufficient funds to operate into 2022. Kodiak reported a net loss of $26 million in the second quarter; it lost $11.4 million for the same period in 2019.
Caption: Shares of Kodiak Sciences and Iterum Therapeutics have gone in opposite directions since their respective IPOs.
At the other end of the spectrum is Iterum Therapeutics (ITRM), which started trading in May 2018 at $13. Today, the stock of the Irish company is at a minuscule $0.46, a decline of 96%. Iterum is working on next-generation oral and intravenous antibiotics to treat infections caused by multi-drug resistant pathogens in both community and hospital settings. The company recently announced a public offering of shares to raise more than $17 million, which it sorely needs considering it had only enough cash to fund operations through the end of the year.
Other IPOs that have scored significant gains in share price since their IPOs include:
- Turning Point Therapeutics Inc. (TPTX) +480%
- BioNTech SE (BNTX) +417%
- Karuna Therapeutics Inc. (KRTX) +401%
- Allakos Inc. (ALLK) +367%
- Eidos Therapeutics Inc. (EIDX) +324%
Other IPO stocks that have suffered huge losses in market value since their IPOs include:
- Vyne Therapeutics Inc. (VYNE) -90%
- Entasis Therapeutics Holdings Inc. (ETTX) -89%
- Gritstone Oncology Inc. (GRTS) -82%
- Rubius Therapeutics Inc. (RUBY) -80%
- Aptinyx Inc. (APTX) -79%
Disclosure: The author has no position in any of the companies mentioned in this article.
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