These days, if you want to push a biotech IPO that isn’t directly related to gene editing, you better head to Wall Street surrounded by deep pocket investors ready to buy in to help prop up the stock price.
And even then, it may not go your way.
Case in point: Syros Pharmaceuticals $SYRS. The Cambridge, MA-based Syros is pursuing a popular path, focusing on specific genetically mutated forms of acute myeloid leukemia and relapsed high-risk myelodysplastic syndrome by focusing on non-coding regions of DNA to build a new cancer drug platform. But that’s evidently not good enough to get investors whipped up — especially as they’re still not in Phase II with the lead drug, SY-1425.
Another drug is slated to start human studies next year.
Even with players like Arch and Flagship in its corner – combined they controlled 46% of the biotech’s shares – flagging their readiness to pay up to $35 million for shares, Syros had to discount its share price, dropping below $14 to $16 a share to price 4 million shares at $12.50 each.
The biotech raised $50 million, falling far short of the $73 million figure the executive team had in mind.
This is the 15th biotech IPO Nasdaq has tracked in H1. And it’s another example of the chilly reception that most drug developers can expect when they head to Wall Street in a bearish market. And it seems that Brexit has reminded investors the world over that they live in a risky, uncertain place, though the travails of a European island economy would seem to be a remote considerations.
Surviving Brexit concerns, though, has been added to the list of threats all public companies face.
Syros (SYRS) is first post Brexit IPO. Real strength in the perfect storm. Genomic medicines from novel insights into gene regulation.
— Robert Nelsen (@rtnarch) June 30, 2016
Nelsen, of course, has a vested interest in seeing Syros succeed. But heavy inside buying in biotech stocks has injected volatility into the market, reports Renaissance Capital in a Q2 report, as you can see here:
But that won’t stop more insider support among investors who want to push their startups into the public markets.
“Healthcare made up 14 of the 33 IPOs (42%), though most were microcap biotech or device companies and five raised just $20 million or less,” reports Renaissance. “The healthcare sector continued to rely heavily on existing shareholders to complete offerings; nine health care companies (64%) disclosed insider buying of at least 40% of the IPO.”
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