While the exits of high-flying companies like Slack and Beyond Meat might've gotten more mainstream attention, lesser-known VC-backed biotech startups are also on their way to the public markets, leading to unique, often thrilling opportunities for risk-tolerant investors.
Recently, four VC-backed startups involved in drug discovery or another arenas of healthcare took steps toward their IPOs. Two of these companies take the usual speculation of biotech to a new level, as they're pursuing novel treatments for incredibly rare diseases. Another is focusing on software development to support the healthcare industry.
Fulcrum TherapeuticsRare diseases are a particularly tricky subsector in biotech. The US Food and Drug Administration defines "rare" as having 200,000 or fewer sufferers of a certain disease. This relatively low demand and the consequential limited profit potential have led to such treatments being termed "orphan drugs."
Fulcrum Therapeutics seeks to target this gap by avoiding a siloed approach to treatments. Rather than developing drugs that target a single disease, the company focuses on a gene modulation-based treatment that can be applied to many rare diseases. The company is researching treatments for four diseases, including Duchenne muscular dystrophy, and plans to target another six ailments in 2020.
The Boston-based company plans to offer 4.5 million shares priced between $16 and $18 apiece, scoring up to $81 million at the high end. Existing investors include GV, Third Rock Ventures and Foresite Capital. The company was valued at $250 million after an $80 million Series B in September 2018.
Mirum PharmaceuticalsMirum Pharmaceuticals is approaching the rare pediatric cholestatic liver disease by developing individual targeted treatments. Its lead candidate, maralixibat, is scheduled to begin final clinical trials in 2020, while its runner-up drug, volixibat, is in early trials for treatment of cholestasis in adults.
Founded in 2018, the Menlo Park-based company plans to offer 5 million shares priced between $14 and $16 apiece, raising up to $80 million on the high end. The company was previously valued at $180 million after a $120 million Series A in November 2018. Existing investors include New Enterprise Associates, Rock Springs Capital and Frazier Healthcare Partners. The company plans to trade on the NASDAQ under the symbol MIRM, with Citigroup, Evercore ISI, Guggenheim, Raymond James and Roth Capital serving as underwriters.
Rapt TherapeuticsFormerly known as Flx Bio, San Francisco-based Rapt Therapeutics is developing small-molecule therapies targeting immune responses to cancer and inflammatory diseases such as asthma and atopic dermatitis. Its lead candidate, FLX475, is in early clinical trials for cancer treatment. The company is developing three other potential cancer treatments.
With an IPO fundraising goal of $86 million, the company plans to trade under NASDAQ symbol RAPT, although terms have not yet been set. Bank of America Merrill Lynch, Wells Fargo Securities, BMO Capital Markets and UBS will be joint bookrunners. Rapt was valued at $272 million after a $37 million Series C extension in June. Existing investors include GV, Kleiner Perkins and Topspin Partners.
PhreesiaRather than developing treatments, Phreesia offers a patient-intake software platform. The New York-based company plans to offer 7.81 million shares priced between $15 and $17 apiece, raising nearly $133 million at the high end. It will trade on the NYSE under the symbol PHR. At $16 per share, the company would hold a $658 million market cap.
The company was founded in 2005 and valued at around $284 million after a $34 million Series B in 2017. Existing investors include BlueCross BlueShield Venture Partners, Sandbox Industries and Polaris Partners. The company reported $99.9 million in revenue for the year ended January 31, 2019, up from $79.8 million in 2018. Its loss narrowed to $9.5 million for 2019, down from $14.6 million the year before.
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