One microcap biotech is charging headfirst into treacherous IPO waters, jumping to Nasdaq with modest raise
It’s a tough market right now for biotech IPOs, but one small company is taking the public leap Friday with a modest initial offering.
Blue Water Vaccines raised $20 million in its IPO, pricing shares at $9 apiece late Thursday afternoon. The Cincinnati-based company will use the money primarily to advance a slate of preclinical programs toward IND studies and boost manufacturing capabilities, it reported in its S-1 filing.
When Blue Water debuts Friday on Nasdaq, it will trade under the ticker $BWV.
Long gone are the days of 2020 when the biotech IPO market was booming, a period that stretched well into the first half of 2021 and saw roughly 200 companies go public. The bull market helped bring in about $30 billion in new cash, as investors set their sights on the life sciences hoping to find the next pandemic success like Moderna.
During that period, it was not uncommon to see three or four biotechs price their IPOs every week. Some were so busy that 10 biotechs debuted in a single week last February, and raises topping the $200 million mark were aplenty.
However, the sector has come down from that high in a stark fashion, as the biotech XBI has shaved more than 40% from that February 2021 peak. And already this year, the figure lost 20% of value in January alone, though it has stabilized around that level so far this month.
The shift has led some to speculate that VCs were perhaps overeager in pushing their investments public to capitalize on the booming market, even if many such biotechs had not yet reached the clinic. RA Capital Management, a notable presence in the crossover space, shepherded several such biotechs to Nasdaq during the pandemic.
Two notable examples, Janux Therapeutics and Tyra Biosciences, are each down 35% from their IPO prices last June and September, respectively.
And at least one biotech, concerned over the ever-ethereal “market conditions,” elected to go after another private megaround rather than jump to Nasdaq earlier this week. It remains to be seen if other companies will follow Kallyope’s lead, but the ramifications could be felt throughout the sector.
With Blue Water seemingly bucking the trend Friday, microcap IPOs may end up able to weather the storm given the lower market expectations. The biotech priced at the midpoint of its range and offered 2.2 million shares.
Like many of its newly public counterparts, Blue Water does not have any programs in the clinic just yet. It’s developing several different vaccine candidates ranging from a universal flu shot to a standalone, long-lasting H1 flu shot. The company is also researching a norovirus/rotavirus vaccine, a norovirus/malaria vaccine and a Streptococcus pneumoniae vaccine.
In addition to preclinical research and IND studies for all programs, some of the cash will also be used to fund Phase I studies for the flu shots and the Streptococcus pneumoniae vaccine, the biotech reported to the SEC.
