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Biotech IPOs off to a strong start in 2020

4 firms have raised more than double their initial expectations

by Ryan Cross
February 20, 2020 | A version of this story appeared in Volume 98, Issue 8

A photo of the Nasdaq stock exchange.
Credit: Shutterstock
Biotech firms are having success with their IPOs on the Nasdaq exchange.

The impending US election and debates over drug pricing haven’t dimmed enthusiasm for new biotech stocks. So far, 2020 has been a surprisingly good year for biotech companies debuting on Nasdaq.

Four companies—Beam Therapeutics, Black Diamond Therapeutics, Revolution Medicines, and Schrödinger—all originally filed to raise $100 million from their initial public offerings (IPOs). But as their offering dates neared, all four amended their IPO estimates to about $180 million. When the bell rang, the results exceeded even those increased expectations: each had raised more than $200 million.

What’s more, as of the market close on Feb. 19, shares in the four companies are trading up at least 50% over the offering prices. The Nasdaq Biotechnology Index is up only about 2% since the year began.

The firms are all developing hot technologies or tackling popular drug targets—such as the tough-to-drug protein KRAS, which is implicated in many cancers. Beam is developing CRISPR base-editing therapies for rare genetic diseases. Black Diamond, Revolution, and Schrödinger are pursuing small-molecule drugs for cancer.

Other drug firms have also landed strong IPOs. Arcutis Biotherapeutics, which develops skin disease drugs, raised $183 million in a January IPO, passing its initial and amended estimates of $100 million and $152 million, respectively.

New firms hope to get on the bandwagon. The rare-disease company Imara recently filed to raise $86 million, and the gene therapy start-up Passage Bio filed Feb. 3 for a $125 million IPO and amended the estimate to $153 million 2 weeks later.



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