Over 50% of Biotech Companies IPO on NASDAQ in 2024 Still Face Challenges

Summary:

In the biotechnology sector, Initial Public Offerings (IPOs) are always considered a vital indicator of industry development, and the NASDAQ stock exchange in the United States is one of the first choices for global biotech companies considering an IPO.

According to incomplete statistics, in 2021, a staggering 63 companies went public on NASDAQ! However, the situation has been worsening in the following years. In 2022, only 9 biotech companies successfully listed on NASDAQ, and in 2023, there were 11, only two more than in 2022. In the first half of 2024, NASDAQ has seen the listing of 9 biotech companies, which is already equal to the total number for the whole of 2022, just two short of the total for 2023. It is evident that NASDAQ IPOs have bottomed out and are in the process of recovery.

These 9 companies have brought their unique treatment areas and innovative technologies. This article will analyze the performance of these companies’ IPOs to reveal market trends and potential investment opportunities.

01 IPO List

In the first half of 2024, 9 biotech companies successfully went public on NASDAQ, involving various therapeutic areas such as central nervous system diseases, oncology, genome editing, autoimmune diseases, metabolic diseases, and neuroscience.

CG Oncology (CGON) had its IPO on January 24, 2024, focusing on urological oncology, with an offering price of $19 and raising $380 million. This was the first IPO company in 2024, attracting global attention and focus. Drug Times also made multiple reports on it.

ArriVent BioPharma, Inc. (AVBP) had its IPO on January 25, 2024, focusing on oncology research, with an offering price of $18 and raising $175 million. The company’s main assets were introduced from China and it should be regarded as a successful LIDIPO case.

Alto Neuroscience, Inc. (ANRO) had its IPO on February 1, 2024, focusing on precision medicine in the field of neurology, with an offering price of $16 and raising $129 million.

Fractyl Health (GUTS) had its IPO on the same day, focusing on transformative therapies for metabolic diseases, with an offering price of $15 and raising $110 million.

Kyverna Therapeutics (KYTX) had its IPO on February 7, 2024, focusing on transformative therapies for autoimmune diseases, with an offering price of $22 and raising $319 million.

Metagenomi (MGX) had its IPO on February 8, 2024, focusing on genome editing technology, with an offering price of $15 and raising $94 million.

Contineum Therapeutics (CTNM) had its IPO on April 4, 2024, dedicated to the research and development of small molecule drugs in the fields of neuroscience, inflammation, and immunology, with an offering price of $16 and raising $110 million.

Boundless Bio had its IPO on March 27, 2024, focusing on oncology research, with an offering price of $16 and raising $100 million.

Rapport Therapeutics (RAPP) had its IPO on June 6, 2024, focusing on the development of small molecule drugs for treating central nervous system diseases, with an offering price of $17 and raising $136 million.

02 Issue Price and Fundraising Amount

The offering prices of these 9 companies range from $15 to $22 per share, reflecting the different evaluations of the market on the technological potential and growth prospects of these companies. The total amount of funds raised ranges from $94 million to $380 million. This fund is crucial for promoting the innovation of the companies in their respective therapeutic fields. For example, CG Oncology, which focuses on urological oncology, raised $380 million at an offering price of $19 per share, while Metagenomi, which focuses on genome editing, raised $94 million at an offering price of $15 per share. These IPOs not only provide financial support for the companies but also reflect the confidence of investors in the continuous growth and innovation potential of the biotechnology industry.

03 Price Range and Market Response

In the IPOs of Nasdaq biotechnology companies in the first half of 2024, the setting of price ranges and market responses revealed different expectations of investors for the potential of these enterprises. The final offering prices of most companies were at or above the originally set price range, indicating a warm market response and recognition of the future value of the companies. For example, the offering price of Rapport Therapeutics was set at $17 and finally closed at $24.3, significantly higher than its price range of $16 to $18, raising $136 million. While the offering price of Contineum Therapeutics was $16 and finally listed at the lower limit of the $16 price range, raising $110 million. Overall, the market responded positively to these newly listed companies. The increase in stock prices reflects the confidence of investors in the innovative technologies and market prospects of these companies, especially in fields such as oncology, genome editing, and precision medicine.

04 Market Value and Market Performance

The market capitalizations and market performances of these 9 biotechnology companies vary. Rapport Therapeutics, which focuses on the treatment of central nervous system diseases, reached a market capitalization of $860 million after the IPO, showing the high expectations of the market for its small molecule drugs. ArriVent BioPharma, Inc. and CG Oncology in the oncology field have market capitalizations of $626 million and $2.31 billion respectively, highlighting investors’ attention to innovative oncology therapies. Especially for CG Oncology, which focuses on urological oncology, its market capitalization jumped significantly from the raised funds of $380 million to $2.31 billion, reflecting its strong performance in the market. Overall, the market capitalizations and stock price performances of these companies not only reflect the market’s confidence in their technologies but also indicate the investment enthusiasm and growth potential of the biotechnology industry.

05 Therapeutic Area Analysis The biotech IPOs on NASDAQ in the first half of 2024 covered a wide range of therapeutic areas, including central nervous system diseases, oncology, genome editing, autoimmune diseases, metabolic diseases, and neurology. Oncology has been particularly focused on, with several companies such as ArriVent BioPharma, Inc. and CG Oncology focusing on this field, with the latter focusing on urological oncology and raising $380 million in its IPO. In addition, emerging technologies such as Metagenomi’s genome editing and Kyverna Therapeutics’ autoimmune disease therapies have also attracted market attention. The diversity and innovation of these therapeutic areas demonstrate the vitality and potential of the biotech industry in addressing unmet medical needs, and also reflect the high recognition and expectation of the capital market for these innovative technologies.

06 Technical Platform

The biotech companies that went public on NASDAQ in the first half of 2024 demonstrated a variety of technical platforms, including small molecule drugs, genome editing, transformative therapies, and precision medicine. Rapport Therapeutics and Contineum Therapeutics focus on the development of small molecule drugs, targeting central nervous system and neuroscience, inflammation, and immunological diseases, respectively. Metagenomi uses genome editing technology to promote the development of innovative therapies. Companies such as Kyverna Therapeutics and Fractyl Health adopt innovative therapies targeting autoimmune and metabolic diseases. Alto Neuroscience, Inc. represents the field of precision medicine, focusing on neurology. The diversity of these technical platforms reflects the depth and breadth of the biotech industry in therapeutic innovation and has also attracted great interest and investment from the capital market.

07 Breakage Rate > 50%

Out of the 9 companies that successfully went public, 3 have current stock prices higher than the issue price, with the ratio of the latest stock price to the issue price being: CG Oncology (182%), Rapport Therapeutics (143%), ArriVent BioPharma (104%); 1 company is flat, which is Contineum Therapeutics. The remaining 5 are all below the issue price. According to the ratio of the latest stock price to the issue price, these 5 are: Metagenomi (37%), Fractyl Health (38%), Boundless Bio (41%), Kyverna Therapeutics (43%), Alto Neuroscience (75%). Therefore, the stock breakage rate of biotech companies that have gone public on NASDAQ in 2024 so far is 55.6%, which is a bit higher than expected, but it is likely lower than the breakage rate of companies listed on the Hong Kong Stock Exchange. We will compile some relevant data from the Hong Kong Stock Exchange.

08 Chinese Biotech Entering NASDAQ

The capital winter still envelops the Chinese innovative drug industry and enterprises, with many enterprises persisting and waiting for the arrival of spring. Some excellent companies have achieved self-sufficiency through listed products or have successfully gone overseas, obtaining a large amount of cash and global industry recognition, and then began to plan to enter NASDAQ. On November 9, 2023, Chengyi Biotech reached an exclusive licensing agreement with AstraZeneca worth $2.01 billion to jointly develop and commercialize ECC5004, targeting the field of cardiovascular metabolic diseases. This cooperation not only strengthened the development of ECC5004 but also enhanced Chengyi Biotech’s market influence. It is reported that the company may consider NASDAQ as the first place for its IPO.

On June 14, 2024, the Hong Kong-listed company Ascentage Pharma Group International (HK: 06855) disclosed that the company has secretly submitted a prospectus to the U.S. SEC, planning to go public in the United States. According to the announcement, the number of shares and American Depositary Shares to be offered and the suggested offering price range have not yet been determined. It is believed that more and more Chinese biotech companies will head across the ocean to ring the IPO bell there!