If IPO sectors typically arrive in waves, then 2014 has been a tsunami of biotechs, particularly during February (10 biotech IPOs) and March (10). Assuming every biotech on the IPO calendar for July actually prices, we could see 19 go public this month, a sharp spike from the 38 biotech IPOs in the first half of the year. Biotechs now represent 50% of the 34 IPOs scheduled for the next two weeks. Depending on investor appetite and companies' willingness to adjust valuations accordingly, July could be the busiest month for IPOs in 14 years, immediately following the busiest quarter for IPOs in 14 years.
Interestingly enough, IPO buyers will soon face a flurry of upcoming health care IPOs (with notable backers) that are focused on the eyes, ears and nose, while yet another could launch as early as next Friday.
Three eye therapy biotechs
Pfenex (NYSEMKT:PFNX), which is developing a biosimilar version of the current standard of care (Lucentis) for the eye disease wet AMD, had originally planned to go public last week and is now expected to price in the next two weeks. A former division of Dow Chemical, Pfenex cut its range and decreased the proposed market cap by 26%, yet investors' caution could be driven by its early stage of development and potential competition.
Ocular Therapeutix (NASDAQ:OCUL) is developing injectable sustained release therapies that treat various eye conditions and diseases. It recently won FDA approval for a sealant that closes cataract incisions, but also has treatments in the pipeline for post-surgical inflamation, Glaucoma, conjunctivitis and wet AMD.
Avalanche Biotechnologies (AAVL), which develops a gene therapy platform for treating eye diseases, expects to raise $76 million next week. Its lead candidate is in Phase 2 trials for wet AMD. The biotech has also partnered with Regeneron to treat a rare genetic disease. Regneron, a potential competitor with one of the three approved therapies for wet AMD, has agreed to purchase shares in a concurrent private placement, joining existing investors Zygi Wilf (owner of the Minnesota Vikings), Venrock and Fidelity.
Both Ocular and Avalanche should benefit from insiders buying on the offering. All three have treatments that target the lucrative wet AMD market, yet none of those candidates have reached Phase 3 trials. An "eye" IPO honorable mention: Mobileye (NYSE:MBLY), which provides software for cameras to interpret and react to danger on the road, also set terms for next week.
Two ear therapy biotechs
Auris Medical (NASDAQ:EARS), a late-stage biotech developing treatments for acute and post-acute inner ear tinnitus, is expected to raise about $76 million next week. The company also has a candidate for inner ear hearing loss and Ménière’s disease in its pipeline. Backed by Sofinnova, its filings suggest insiders will purchase 25% of the deal on the IPO.
Otonomy (NASDAQ:OTIC) submitted an initial filing on July 11, meaning it could set terms for an IPO as early as Friday, August 1. It recently completed final Phase 3 trials for a sustained-exposure treatment that corrects middle ear effusion during TTP surgery. Its second candidate is in Phase 2b trials for Ménière’s disease and has a preclinical candidate for tinnitus. Its well-known shareholders include Novo A/S, TPG and Domain.
One maker of bioabsorbable post-surgical nasal implants
Intersect ENT (NASDAQ:XENT) markets a drug eluting nasal implant that is absorbed by the body after sinusitis surgery. It is also in Phase 3 trials for a steroid implant that can be inserted in doctors' offices rather than the surgery room. With $23 million LTM sales, Intercept claims its advanced products offer better relief than oral steroids and temporary nasal packing materials. Its illustrious backers include US Venture Partners, Kleiner Perkins, Norwest and Medtronic.