Recursion will take its AI platform public in latest IPO filing, while rare heart mutation biotech jumps on SPAC train
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The IPO market continues to churn, with a prominent AI drug developer becoming the latest biotech to register with the SEC.
Recursion Pharmaceuticals filed its S-1 paperwork late Monday, coming about six months after completing a $239 million Series D round and securing a deal with Bayer worth up to $1 billion. The Salt Lake City-based biotech is penciling in a $100 million IPO raise for now, but could have its sights set on a much higher figure.
Biotech IPOs have remained hot in the first quarter following a record year in 2020, when the industry saw 91 public debuts with a collective $16.5 billion raised, per Nasdaq. Through the first two and a half months of 2021, the industry has raised a combined $3.81 billion among 22 biotechs that have priced, per the Endpoints News tally.
And after a brief cool down toward the end of February, the market started heating back up again last week when four biotechs priced, marking the second-busiest week of 2021. That title, however, belongs to the first calendar week of February, when 10 companies went public.
Recursion’s Series D marked one of the largest, if not the single largest, funding rounds for an artificial-intelligence-focused biotech. The Bayer deal also signified an important revenue stream for the biotech, with Bayer promising up to $100 million in milestones for each of up to 10 programs the companies could pursue.
The company’s AI approach centers around a 100,000 square-foot warehouse in downtown Salt Lake City, where robots take Petri dishes of different cell types and knock out different genes. They’re constantly taking pictures in the process, with the differences being too small for a human eye to differentiate. But their computers can, and by doing so pick up patterns to indicate what can make a cell sick and which genes, when targeted, can make them healthy.
Within its S-1, Recursion signaled a broad development push across its pipeline. The biotech plans to focus the funds on Phase II trials for four of its programs: REC-4881 for familial adenomatous polyposis, REC-3599 for GM2 gangliosidosis, REC-2282 for neurofibromatosis type 2 and REC-994 for cerebral cavernous malformation.
There are also plans to use some of the money on six of the biotech’s preclinical candidates, including Batten disease, solid and hematological malignancies and the lead molecule for the treatment of C. difficile colitis.
Rare heart mutation biotech Renovacor rides $116M SPAC to Nasdaq
Another biotech has gone public via the SPAC route, which like traditional IPOs, has seen a hefty rise in the industry over the last year.
Tuesday’s winner is Renovacor, pulling off a reverse-merger with Chardan Capital Markets’ second blank check company. Once the deal closes in the second quarter, Renovacor will see proceeds of $116 million and list on Nasdaq under the new ticker $RCOR.
SPACs continue to be all the rage on Wall Street, with several notable backers listing new holding companies and taking them public recently. Foresite and Perceptive both launched new SPACs earlier this year, and Richard Branson took biopharma by storm when his blank check company merged with 23andMe in February.
Renovacor’s raise is expected to help the biotech advance its lead program into Phase I/II studies, which is an AAV‑based gene therapy for patients suffering from dilated cardiomyopathy due to mutations in the BAG3 gene. An IND submission is expected for mid-2022 with the trial beginning “shortly thereafter,” the company said.
DCM patients are typically treated with a cocktail of treatments including ACE inhibitors, beta-blockers, water pills and blood thinners. Renovacor’s experimental therapy is engineered to replace the gene to restore function.
The biotech had raised $11 million in a Series A back in August 2019.