IPOs

IPO market warms with Spero, Allena heading to Wall Street

Two Boston biotechs are diving in to a frothy IPO market this morning as they headed to the Nasdaq to raise a combined $152 million.

Antibiotics company Spero Therapeutics brought in $77 million by selling 5.5 million shares at $14 each. The company originally hoped to raise $92 million in the offering, according to a statement filed with the SEC in late October. Spero’s IPO was helped along with support from insiders, with Spero backers committing to buy 39% of its IPO ($30 million) before it went live.

Spero is one of the many companies tackling drug-resistant antibiotics. Its experimental drug SPR741 is meant to punch up the effectiveness of antibiotics by penetrating the outer cell membranes of Gram-negative bacteria. The company also has a broad-spectrum product, SPR994, in Phase I clinical trials. The clear majority of the capital raised in its IPO is intended to carry SPR994 through clinical trials, according to the SEC statement.

The other newcomer to the market, Allena Therapeutics, raised $75 million in its IPO, selling 5.3 million shares at $14 apiece. That’s also below earlier predictions. Last month in an SEC filing, Allena said it expected to raise $98 million at $16 per share. Allena shareholders bagged $25 million, or about 31%, of the company’s total offering.

Allena arrives on Wall Street with a bit of baggage: two Phase II flops. Allena’s lead drug is ALLN-177 for hyperoxaluria, which occurs when too much oxalate is present in urine. The condition can damage the kidneys. ALLN-177’s recent Phase IIb trial failed to demonstrate a statistically significant reduction in urinary oxalate excretion. But the biotech claimed a success for some post-hoc analysis and a secondary endpoint: time-weighted average 24-hour urinary oxalate excretion. That’s what they want the FDA to sign off on as their primary endpoint for a pivotal study, which will focus on more severe cases of enteric hyperoxaluria. They’re headed for the Phase III trial next year, with data expected in 2019. Proceeds from this IPO will be used to fund the pivotal trial.

Although both companies raised capital on the low end of their ranges, the activity is still indicative of a warming IPO market for biotechs. IPO research firm Renaissance Capital reported in September that biotechs helped drive up the average returns of the 29 offerings in Q3.

We started out the year with several analysts predicting an okayish year for biotech IPOs — not 2014 hot, but equal to or slightly better than the 28 IPOs we saw last year. So far, we’re looking at a slightly hotter year than last. With Spero and Allena added to the mix, we’re at 33 IPOs in 2017.


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