Despite a slow/no-go IPO market we’ve had some companies brave the markets and price very successful deals. Here are some highlights from our weekly IPO Candygram.

We also started compiling some things we find helpful like our IPO Candy 2019 yearbook which we will be doing again this year but releasing quarterly so it’s more current. You can download the PDF here: IPO Candy 2019 Yearbook

The Deals

Keros Therapeutics (KROS) priced at the high end of the range ($16) and increased the number of shares offered. The stock had good aftermarket demand and ended the week at $21.57. It’s climbed even higher to $27.18 today.

This small biotech has three compounds in development for treating blood-based diseases and bone loss. The deal as filed was for 5M shares with a $14-16 range for a size of $75M and a $285M market value at the mid-point.

Keros focuses on a specific family of proteins (TGF-β) that are involved in the development of blood cells, muscles and bone. Their strategy is to leverage their expertise in developing product candidates around these pathways including commercialization of their current lead compounds.There are plenty of applications for these compounds in the blood (anemia) and bone (osteoporosis).

As with most companies now they have added an important “recent development” from the impact of COVID-19 which is expected to have a major impact on clinical trials going forward. I continue to marvel at the number of risk factors facing companies outside of the “obvious” there are 60 pages of them in the S-1 filing.

The company does have a research collaboration and exclusive license agreement with Novo Nordisk around the discovery and development of “Ligand Traps” which might lead to the development of a new compound. Keros received an upfront payment of $16M and then $2M per year over the 2 year period. There are also $96M of potential milestone payments in six different chunks for the first compound. There’s also a second set of similar milestones that would apply to a second or third licensed product that total $80M. On top of that there are sales milestone payments that could reach $70M and royalties. The sum of these *potential* milestone payments exceeds the proposed market value by quite a bit. It’s hard to put probabilities on it given that they are only in “research mode” but it puts a pretty high independent value on the work that the company is doing.For reference Novo Nordisk is an $18B revenue, $140B market cap pharma.

Zentalis Pharma (ZNTL) raised $165M by pricing their deal at the high end of the range at $18. It finished the week at $23.20 with a market value of over $800M.

The company is has developed some small molecule drug candidates for treating cancer. This is “yet another additional drug to take in combination with existing treatments for cancer” space but there are some positive notes:

  1. Zentalis is focusing on proven pathways that target cancers and using medicinal chemistry and their tuned discovery process to generate small molecules that have strong pre-clinical data to support their potential.
  2. It’s an efficient approach which has allowed the company to reach 3 active IND filings in less than three years with two more planned in the next year.
  3. The data presented for the lead drug candidates definitely shows promising results including in the treatments for breast cancer and solid tumors. Again these are expensive combination therapies but they are still needed.
  4. With $162M already invested and at least 3 active compounds in clinical trials the proposed market cap of $580M is fairly small.

Finally one very small deal didn’t get a warm reception:

WiMi Hologram (WIMI) is an advertising-based company in China. They priced a small $26M offering at the low-end of the range at $5.50 where it has remained. At first we thought that maybe the holographic nature of what they do would be more differentiated but it seems to have ended up being just another online advertising tool. On the plus side they do appear to be very profitable. The valuation is close to 8x sales.

One Filing

A company we’ve been on the lookout for, GAN (GAN) filed an S-1 last week to list in the US. They are currently traded on the LSE. This is an online betting/gambling software which has become a very hot area in the US with most states legalizing sports betting. Investors have bid up the shares of SPAC Diamond Eagle Acquisition (DEAC) because they are combining with DraftKings to be listed. We’ve done some work on that one which we’ll share once the merger is completed.


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