IPOs, Market

In post-IPO party, Nasdaq’s newcomers Armo, Menlo and Solid soar within hours of listing

Three newly-minted biotech stocks are leaping in value just days after listing on the Nasdaq, sending a clear signal to industry that investors’ insatiable appetite will carry into 2018. Although there’s no sign of this activity slowing down, the collective giddiness of the industry is starting to alarm the more conservative among us. Go-go days come to an end at some point, right?

One company reaping the benefits of the market is Armo Biosciences $ARMO, which went public just this morning raising $128 million. The late-stage immunotherapy company priced its offering at $17 per share on a $526 million valuation. Armo quickly saw its share price soar, closing the day at $29.74 — 75% higher than where it started. Market cap? $845 million by market close.

Independent biotech investor Brad Loncar said he knew Armo would do well because its lead product candidate plays in a popular arena.

“‘Cytokines’ is a buzzword we will be hearing a lot in 2018,” Loncar wrote in an email. “(Nektar) is the biggest story of the year so far, and it’s easy for bankers to call this the next Nektar.”

Jetting north, Armo is joined by Menlo Therapeutics $MNLO, which we saw go public yesterday raising $119 million. The company priced at $17 per share on a $403 million valuation. By today at market close, its stock was up 68% closing at $28.51.

And last, there’s Solid Biosciences $SLDB, which listed on the Nasdaq this morning. It raised $125 million at $16 per share. Despite new revelations that its most advanced drug candidate has been under FDA scrutiny since mid-November, Solid still managed to close the day up at $22.62 per share — a 41% increase.

Loncar said the performance of the first batch of IPOs this year — helped along by two major M&A deals from Celgene and Sanofi — certainly bodes well for the immediate future.

“Biotech is on fire since those two deals on Monday and I do think it is indicative of a strong IPO season ahead,” Loncar said.

Still, things are starting to look a little too hot for some. “You keep your hand on the eject button,” an unnamed hedge fund manager told STAT’s Damian Garde. And Loncar — unprompted — tacked this on the end of his email.

“To be honest, I think it is all too frothy,” Loncar wrote. “But it usually takes months of froth for a reckoning to happen. I wouldn’t be surprised if we are still in the early stages of this.”

Image: shutterstock

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Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT
Director of Operations
Atlas Venture Cambridge, MA

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