Analysts Closely Watch Bay Area CytomX's $80 Million IPO

Published: Oct 09, 2015

Analysts Closely Watch Bay Area CytomX's $80 Million IPO
October 8, 2015
By Mark Terry, Breaking News Staff

South San Francisco-based CytomX Therapeutics, Inc.’s initial public offering (IPO) goes live today under the ticker symbol CTMX. Many analysts are closely watching the IPO as a harbinger of change in the biotech market.

CytomX, which focuses on the burgeoning immuno-oncology market, announced yesterday that its IPO price would be $12 per share, down slightly from the expected $14 to $16 per share that would have brought in $100 million. Instead, the company expects $80 million. But that downgrade has analysts speculating on whether CytomX’s shift is a marker indicating that the shine is off the biotech IPO boom.

CytomX reaching the public market is unusual, and not just because the bears have overtaken the bulls of late,” wrote Alex Lash in Xconomy today. “The firm has yet to put a drug into clinical trials. Even during the unprecedented three-year IPO boom, few preclinical companies have convinced the public markets to climb aboard.”

In its federal filing, CytomX indicated that an existing investor planned to buy up to $15 million of the IPO shares, five percent would be reserved for directors, employees and other people involved in a reserved share program. Prior to the IPO, Third Rock Ventures was the company’s largest shareholder, owning 31 percent of the company, followed by Canaan Partners’ 17 percent.

In June, the company closed on a $70 million Series D financing round. It was led by Fidelity Management & Research Company, and participants included Casdin Capital, Cormorant Asset Management, Deerfield Management, Perceptive Advisors, Redmile Group, Tekla Healthcare Investors and Tekla Life Sciences Investors, Venrock Healthcare Capital Partners, Wellington Management Company and others.

Although the company doesn’t have a product for sale yet, it does have partnerships with Bristol-Myers Squibb Company , Pfizer Inc. and ImmunoGen, Inc. . The company also has plans to file an investigational new drug application (IND) in the second half of 2016.

Analysts are pointing out that CytomX isn’t the only new IPO to downgrade before the ringing of the bell. UK-based Novocure (NVCR) downgraded its IPO price a week ago to $22 per share from an earlier projected price of $26 to $29 per share. But Novocure still managed to riase $165 million. However, Nabriva Therapeutics AG (NBRV) of Vienna, Austria, raised only $92 million, which was less than anticipated.

And BizJournals also points out the success of other life science companies recently, including Alameda, Calif.-based Penumbra, Inc. (PEN) raising $120 million, and South San Francisco-based Global Blood Therapeutics also raising $120 million, and Aimmune Therapeutics, Inc. raising $160 million.

Despite market ups and downs, it’s possible that the interest and value of CytomX is based more on its technology and area of expertise than in the whims of investors. “Our Probody therapeutics are designed to take advantage of unique conditions in the tumor microenvironment to enhance the tumor-targeting features of an antibody and reduce drug activity in healthy tissues,” the company wrote in a statement. “We are currently developing Probody therapeutics that address clinically-validated cancer targets in immuno-oncology, such as PD-L1, as well as novel targets, such as CD-166, that are difficult to drug and lead to concerns about damage to healthy tissues, or toxicities. In addition to our proprietary programs, we are collaborating with strategic partners including Bristol-Myers Squibb Company , Pfizer Inc. and Immunogen, Inc. to develop selected Probody therapeutics.”

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