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Alumis and Upstream Bio, two U.S. start-ups developing drugs for inflammatory diseases, have filed for initial public offerings as dozens of other biotechs prepare to go public this year, according to people familiar with the matter.
Both biotechs have made private filings with the U.S. Securities and Exchange Commission in recent months, with the public offering expected before November’s presidential election, which investors fear could roil markets, the people said.
After being contacted by the Financial Times for comment, Alumis revealed his plans on Friday.
In a bullish sign for the U.S. biotech IPO market, dozens more life science companies filed confidentially, according to advisers, undeterred by the poor performance of 11 offerings so far this year.
Alumis earlier this year completed a $259 million funding round — its largest this year — at a valuation of around $1 billion, according to PitchBook, amid investor hype surrounding its lead drug, which targets the severe plaque psoriasis skin disease. Upstream’s lead drug helps treat severe asthma and is being studied in mid-stage trials. Both companies would likely list on the Nasdaq, which is home to most biotech stocks.
The IPO market is slowly recovering from a sharp market downturn and a rapid rise in interest rates has stalled most deals in 2022, although there have been signs of improvement in recent months.
Biotechs have raised $1.7 billion through U.S. initial public offerings so far this year, up 64 percent year over year, according to Dealogic data. Fundraising by previously listed companies bounced back faster, with so-called “follow-on” deals up more than 100 percent year-on-year to $16.5 billion.
Revival of follow-on actions is often seen as a key requirement to support riskier new listings.
Mike Perrone, a biotech analyst at RW Baird, said the stock market is much healthier than it has been for most of the past two years. But he warned that investor enthusiasm waned in the second quarter as traders dampened expectations of how quickly the Federal Reserve would cut interest rates.
“People are a little more cautious about new ideas.” . .[new listings]it will have to price in a way that is attractive to new investors,” he said.
Most biotechs that have listed in the US so far this year are trading below their IPO price. Bladder cancer specialist CG Oncology was a notable exception, but jumped around 80 percent.
Johnson & Johnson-backed neuroscience startup Rapport Therapeutics also got off to a good start in public life on Friday, raising $136 million and rising 22 percent on its first day of trading. Australia’s Telix Pharmaceuticals also plans to list on Nasdaq in the coming weeks.
Given the uneven performance of recent deals, Perrone added that IPO candidates with less pressing funding requirements may decide to delay listing until after the presidential election and when there is more clarity on rate cuts.
Filing a confidential public filing with the SEC doesn’t commit the company to listing within a certain time frame, but it would position Alumis and Upstream for a quick listing when the window opens. Alumis and Upstream declined to comment.
Alumis could also generate some strategic interest before it goes public, as its lead drug is in late-stage trials and big pharma groups are looking for drugs to add to their pipelines.
“Anyone who has a third-stage asset has a big target on their back. . . for obvious reasons,” said one person familiar with the company’s thinking.