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All Contents © 2019The Kiplinger Washington Editors
By Regina Borsellino
| April 18, 2018
In many sectors, initial public offerings (IPOs) can generate a lot of buzz. After all, a new company is entering the markets. Investors want to know what the company does, how it operates and what potential it holds for future profits. For biotech IPOs, things are a bit different.
For one thing, they’re much more common. Of the last 100 IPOs, 30 have been healthcare stocks. And that’s just since the end of September 2017.
That’s a lot to keep track of for any investor who is also thinking about their current investments. Adding to the confusion is the very nature of biotech stocks themselves. Specifically, biotechs depend on highly scientific developments and properties, which companies often use highly-technical language to explain.
So here’s a starting point for investors looking at biotech IPOs. There are five biotech companies expected to go public before the end of April. Here’s a breakdown of what they actually do.
Prices and data are from the original InvestorPlace story published on Apr. 17. Click on ticker-symbol links in each slide for current prices and more.
This slide show is from InvestorPlace, not the Kiplinger editorial staff.
Alzheon via Wikimedia Commons
Anticipated IPO Date: April 16, 2018 (not yet trading as of this writing)
Proposed Symbol: ALZH
Anticipated Share Price: $13-$15
Alzheon is a pharmaceutical company focused on slowing the progression of Alzheimer’s disease. Alzheimer’s is the most common form of dementia and currently, the sixth leading cause of death in the U.S. 5.7 million Americans currently live with the disease, costing the U.S. an estimated $277 billion yearly. A lot of these scary statistics are due to a lack of treatment — to slow, prevent or cure Alzheimer’s — while the population ages and other diseases become more curable. There are only six drugs that even treat Alzheimer’s symptoms. And all do so without treating the underlying causes of the disease.
That’s where Alzheon comes in. Its current lead product candidate is ALZ-801, a prodrug of tramiprosate. Tramiprosate is a natural organic compound found in seaweed, which binds to Abeta peptides. Buildups of Abeta peptides form plaques, which accumulate in the spaces between nerve cells in people with Alzheimer’s disease.
Though the role of plaques is not yet fully understood, researchers believe that they block communications between nerve cells, disrupting cell process and leading to their destruction — which in turn leads to the dementia that categorizes Alzheimer’s disease.
ALZ-801 blocks the buildup of Abeta peptides (or abeta oligomers), slowing the formation of plaques. ALZ-801 even has potential as a preventative drug. Abeta peptides start to build up years before signs of the disease appear.
Previously, tramiprosate was tested by Bellus Health (BLUSF), but the clinical trials failed to meet critical endpoints. Alzheon has partnered with Bellus Health to re-formulate the drug. Alzheon’s version increases the absorption of the drug in the stomach and lowers the incidences of nausea and vomiting.
Simply, they’ve made the drug safer and more effective and the FDA has rewarded them with a Fast Track designation.
Courtesy Mereo BioPharma
Anticipated IPO Date: April 19, 2018
Proposed Symbol: MREO
Anticipated Share Price: $17.62*
Mereo BioPharma specializes in addressing significant unmet medical needs in rare and speciality disease areas. It does this by acquiring medicines from large pharmaceutical companies. Thus far, it has built a pipeline of four drugs acquired from two companies — Novartis (NVS) and AstraZeneca (AZN))
Despite limited markets, biotechs focusing on rare and orphan diseases can be successful and the U.S. and EU have incentives for these companies.
Of the four drugs in Mereo’s pipeline, BPS-804 is furthest along. BPS-804 treats osteogenesis imperfecta, also known as brittle bone disease. These patients have fragile bones and often suffer a lot of painful bone fractures, along with other debilitating symptoms. OI currently has no treatments and is handled by managing risks and treating fractures as they occur.
BPS-804 is a monoclonal antibody that targets sclerostin, a protein that inhibits bone formation and leads to brittle bones. The drug has been given orphan drug status by the FDA and European Medicines Agency (EMA) and has been accepted into the EMA’s Adaptive Pathways Programme, indicating that there is a high medical need for this drug.
In addition to its four pipeline drugs, Mereo is seeking to acquire 2-3 additional products in the next few years.
*Mereo already trades on the London Stock Exchange, this price is based on the current price at the time of the IPO filing.
Anticipated IPO Date: April 19, 2018
Proposed Symbol: MOR
Anticipated Share Price: $24.12*
Like Mereo, MorphoSys already trades publicly outside of the U.S. Unlike Mereo, however, MorphoSys is a well-established, mature pharmaceutical company, founded in 1992 and having its initial IPO in 1999. Over the years, MorphoSys has partnered with Bayer (BAYRY), Pfizer (PFE), Novartis and other pharmaceutical giants to develop drugs. In 2017, MorphoSys brought in 49.2 million euros ($60.7 million) from its partner programs alone.
MorphoSys specializes in therapeutic antibodies. Antibodies are a part of the body’s immune system, specialized to bind to specific types of cells, bacterium or viruses. This binding marks them for destruction by the body’s immune system.
MorphoSys develops antibodies targeted to specific cells. For example, MorphoSys’ MOR208 is an engineered antibody which targets CD19, an antigen often found on cancerous cells in different types of blood cancer. Thus, MOR208 would bind to CD19, signaling to the body’s immune system that these cancerous cells should be destroyed.
MorphoSys is currently testing MOR208 as a treatment for large B cell lymphoma and chronic lymphocytic leukemia. MOR208 has been granted breakthrough therapy designation, orphan drug designation and fast track designation for one or both of these indications by the FDA and European Commision.
And this is far from the only thing in MorphoSys’s pipeline. The company boasts a staggering 114 developmental programs, both on its own and with various partners.
*MorphoSys already trades on the Frankfurt Stock Exchange, this price is based on the share price at the time of the IPO filing.
Proposed Symbol: SURF
Surface Oncology calls itself the “tumor microenvironment company.” The tumor microenvironment is the non-cancerous cells present in a cancerous tumor. This often includes blood vessels, immune cells and proteins of all the cells in a tumor. Surface Oncology uses monoclonal antibodies to target the proteins often found in cancer cells.
Right now, Surface Oncology’s most promising drug is SRF231, which just entered Phase 1 clinical trials. SRF231 recognizes and binds to CD47, a protein that’s often overexpressed in many cancer cells. In addition to just being a good way to recognize cancer cells, CD47 also signals to the body’s immune system that it should not destroy this cell — making it key to tumor growth.
So by “covering” the “don’t kill me” signal with a “kill me” signal (the SRF231 antibody), SRF231 can slow tumor growth and hopefully reverse it.
Surface Oncology plans to use a similar approach for a range of different cancers, targeting different proteins if necessary. The company currently has seven drugs in its pipeline and three additional partnerships with Novartis.
Small Cap Nation
Anticipated IPO Date: April 27, 2018
Proposed Symbol: TLC
Anticipated Share Price: $7:46
The Taiwan Liposome Company is another well-established company that is about to become available for U.S. traders. Since 1997, TLC has focused on the development of drug delivery platforms using liposomes. Liposomes are round vesicles comprised of double layer of phospholipids. These vesicles can transport drugs through the body without the drug being destroyed or affecting areas of the body not being targeted.
TLC uses their BioSeizer lipid formulation technology or their NanoX active drug loading technology with already approved pharmaceutical ingredients. TLC’s BioSeizer system allows local, sustained, fast and most importantly controlled release of drugs at the site of disease or injury.
Meanwhile, the NanoX system decreases drug toxicity and allows reduced dosages as well as the increased targeting associated with liposome models.
TLC is fairly diversified and develops pain management, ophthalmology and oncology drugs. One very promising drug, still in early stages of development, is TLC590.
This pain management drug would act as a non-opioid local anesthetic for post-surgical pain relief. It’s far away still, but this drug, if successful and widespread, could have huge implications for the current opioid epidemic. (Addictions often start when opioids are prescribed to manage pain.) TLC recently announced an application with the FDA to allow the company to investigate this drug across state lines.
With the high failure rate of clinical trials, TLC590 is far from a sure thing—but when you’re looking to invest in IPOs, it’s all about potential.
*Taiwan Liposome Company already trades on the Tapei Exchange, this price is based on the share price at the time of the IPO filing.
This article is from Regina Borsellino of InvestorPlace. As of this writing, Borsellino did not personally hold a position in any of the aforementioned securities.
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