Biotech Public Offerings at 10-Year Low

Majority of IPOs trading below the offering price

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Jul 11, 2022
  • Newbies HilleVax and PepGen have lost value.
  • Eye disease-focused Belite Bio stock is up more than 500%.
  • Nine new companies have filed for IPOs with Nasdaq.
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No matter how you slice it, this has been a poor year for biotechnology stocks. Not only is the SPDR S&P Biotech ETF (

XBI, Financial) down nearly 29% year to date, but biotech initial public offerings have sunk to a 10-year low, according to a report from Evaluate.

For the most part, investors who pumped their money into fledgling drug developers that went public cannot be pleased. Eight of the 13 newbies are already trading below their offering price.

That is the case with HilleVax Inc. (

HLVX, Financial), which so far this year has raised the greatest sum in its upsized offering, about $230 million. Since opening at $17 a share on April 29, the stock of the Boston-based company has retreated about 19% to $13.78.

I think the company may be a good bet, given it is developing a vaccine that could be the first to market for norovirus, a highly contagious virus that causes vomiting and diarrhea. Globally, the virus is the second-most common cause of death in children under five years old. In developing countries, norovirus accounts for 170,000 to 277,000 deaths per year and around 700 million cases according to the World Health Organization.


Caption: Belite Bio shares have climbed more than 500% since its May IPO, while newcomers HilleVax and PepGen have gone in the opposite direction.

Not only is the size of the opportunity huge, but I like that the project is probably closer to becoming commercially available than others given vaccine licensor Takeda Pharmaceuticals Inc. (

TAK, Financial) has already finished a great deal of the clinical work and should produce confirmatory effectiveness results late next year.

JPMorgan's Eric Joseph also likes the stock. He thinks the drop in price post-IPO fails to reflect the vaccine’s potential, assigning the shares an overweight rating and forecasting a $24 price in the coming year.

Right now, I am taking a wait-and-see attitude on PepGen Inc. (

PEPG, Financial), the most recent biotech IPO. The company has just one drug in the earliest stage of development. It is for Duchenne muscular dystrophy, which is going to be a tough nut to crack.

Belite Bio Inc. (

BLTE, Financial) has rewarded investors who got into the IPO at the $6 offering price. They have seen the value of their shares in the San Diego-based company soar by 570%.

The company is tackling untreatable eye diseases, including atrophic age-related macular degeneration and Stargardt disease (STGD1), as well as metabolic diseases. STGD1 is the most common inherited retinal dystrophy (causing blurring or loss of central vision) in both adults and children.

In early May, Belite’s oral treatment was granted Fast Track Designation by the Food and Drug Administration for the treatment of STGD1 . Belite said it is conducting a phase 3 clinical trial to bring to market a treatment that will halt or slow the progression of the disease. It is evaluating a plan to launch a phase 2 and 3 trial in atrophic age-related macular degeneration in 2022, it said.

The lack of support for biotech IPOs is not seeming to faze the nine companies that have filed documents with Nasdaq. Two joined the IPO lineup in June, Genelux and Shuttle Pharmaceuticals, the first biotechs to do so since April.

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