IFR - 07.07.2018

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but could be larger.
The KKR & Co-backed company generated
US$655.7m of sales in the six months ended
March 31 2018, up 15% from the year-ago
period. For the same period, the company
reported net income of US$13.1m and
adjusted Ebitda of US$50.5m.
As of March, Sonos customers had
registered more than 19m products in 6.9m
homes globally.
Though some of Sonos’ products are
powered by Amazon’s Alexa technology,
Amazon competes through the sale of its
own speaker products. Sonos also competes
with other tech companies such as Apple
and Google as well as traditional speakers

and sound system makers such as Bang &

Olufsen, Bose, Samsung and Sony.

LIQUIDIA IPO FUNDING PHASE III TRIAL

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IPO that will provide funding for a Phase III

trial of a potentially disruptive treatment for

pulmonary arterial hypertension.

The offering will have some insider

participation but the level of commitment

has not been set.

Liquidia’s top shareholders are New

Enterprise Associates (18.7%), Canaan (17.7%)

Xeraya (9.8%), Bill & Melinda Gates

Foundation (7.5%) and Morningside Venture

Investments (5.4%).

Jefferies and Cowen are joint bookrunners.

Liquidia’s lead drug LIQ861 is designed to

get a metered dry powder formulation of

the FDA-approved drug treprostinil deeper

into the patient’s lungs than a nebulizer.

United Therapeutics product Tyvaso,

which delivers a dose of treprostinil through

a nebulizer, is the current standard of care

for treating PAH.

Tyvaso was approved in 2009 and

generated US$373m in sales last year.

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pathway for new formulations of drugs that

have already proven to be safe and

effective.

A Phase III trial is ongoing and Liquidia

expects to report safety data early next year.

EQUITIES AMERICAS

Biotech IPOs thrive in golden age of innovation

„ US Biotechs price a year’s worth of IPOs in six months.

The potential for curing life-threatening diseases

has never been greater than it is right now.

Some of the latest breakthrough treatments

for cancer and inherited diseases did not exist

five years ago but this is not preventing drug

developers from funding the cycle of innovation.

Biotechs have already raised US$3.5bn from

31 IPOs, nearly matching last year’s overall totals

at mid-year. The current rate of issuance has

this year’s biotech class tracking towards 2014’s

record performance (see chart).

“We are in the golden age of innovation for

drug discovery and the science has improved so

significantly that we are seeing dramatic data in

earlier-stage trials,” said Jim Cooney, Americas

head of ECM at Bank of America Merrill Lynch.

“Investors continue to show willingness to fund

that development.”

SOLID BIOSCIENCE was pre-clinical with its gene

therapy for Duchenne muscular dystrophy when

it went public in late January. The potential cure

for the devastating muscle-wasting disease

allowed Solid to garner more than US$500m of

market value in its market debut.

Insider participation is standard for biotech

IPOs. Existing shareholders took half of Solid’s

US$123m IPO. Its ability to attract new investors

has carried the stock to US$38.95 for a 143%

return on the offer price.

“The best-performing deals are the ones that

have an ability to attract new investor interest,

as it is generally these investors who are the

aftermarket buyers and catalysing strong trading

outcomes” Tommy Rueger, JP Morgan’s head of

healthcare, ECM, told IFR.

NEW KID IN TOWN

Biotech’s golden age of innovation has caught

the eye of Goldman Sachs.

The bank has book-run nine biotech IPOs this

year to-date for US$493m of apportioned credit,

ranking first overall with a 15% market share, this

is up from zero in the first half of 2017.

Goldman led some of the best-performing

deals of the year after years of luring new

business with big follow-ons and convertibles,

according to critics.

Notable deals include Solid Biosciences as

well as AUTOLUS THERAPEUTICS (up 55%), a Phase

I/II developer of programmed T-cells that are

designed to attack and kill cancer cells.

There is no lack of competition among

investment banks for choice mandates.

JP Morgan, the long-time standard bearer in

the healthcare space, has fallen to fourth place

but there is still much work to be done.

“We’ve already matched last year’s number of

biotech IPOs in six months,” said Rueger. “Based

upon the current quality and level of biotech IPO

supply, it feels like both issuers and investors are

poised for another strong year.”

The market backdrop is positive. The NYSE

Arca Bitech Index is up 14% this year versus a

2.5% bump in the S&P 500. Biotech IPOs have

outpaced both with a 25% average return.

After a record June with 15 biotech IPOs, six

more deals are in the hopper including four from

JP Morgan.

At the larger end of the spectrum is RUBIUS

THERAPEUTICS with a US$200m IPO. Keeping

with the early stage theme, Rubius does not

expect to begin clinical trials for its cell therapy

drugs until early next year.

Rubius took in US$101m in February on a

Series C round that included participation from

Flagship Partners and Fidelity. It was one among

12 biotechs that priced so-called “mega rounds”

of US$100m or more in the first quarter of 2018,

according to the PWC MoneyTree Report.

Large private rounds are usually a prelude for

an IPO, so life science ECM bankers have their

work cut out for them for the rest of the year.

Robert Sherwood

BIOTECH BINGE:

INDUSTRY ON PACE TO ECLIPSE RECORD ISSUANCE

Year IPO totals (US$bn) NYSE Arca Biotechnology Index

2014 66 7.5 3,439.11

2015 40 4.7 3,813.96

2016 22 2.7 3,075.02

2017 32 3.6 4,222.21

2018* 31 3.4 4,832.11

Note: *Totals through July 3 2018

Source: Thomson Reuters

EQUITY-LINKED DEALS WEEK ENDING: 6/7/2018
Issuer Country Date Amount Greenshoe Tenor Coupon (%) Premium (%) Bookrunner(s)
Shandong Ruyi/SMCP France 05/07/2018 €60m N/A 2019 4.00 10.0 JP Morgan