As Market Froths, Blueprint Medicines Debuts $147 Million IPO for Massachusetts' Biggest Recent IPO
Published: May 01, 2015
April 30, 2015
By Riley McDermid, BioSpace.com Breaking News Sr. Editor
Cambridge, Mass.-based cancer startup Blueprint Medicines said Thursday it is oversubscribed for its initial public offering, selling 8.15 million shares at $18 apiece Wednesday evening for a total of $147 million, a massive jump from the 7.2 million shares at $15 to $17 apiece it estimated it would sell last week.
That pricing was 28 percent lower than what this week’s frothier market will support, meaning that when Blueprint does finally list on the NASDAQ under the ticker BPMC, it carries with its investors’ high hopes—and a lot of their money. It also places it ahead of the 28 biotech firms which have gone public in in the last two years, even larger than Newton-based Karyopharm Therapeutics , which whipped up $125 million for its Nov. 6, 2013 IPO.
Blueprint said Goldman, Sachs & Co. and Cowen and Company will act as joint bookrunners, while JMP Securities and Wedbush PacGrow will be co-managers for the offering.
Run by former Algeta CEO Jeffrey Albers, Blueprint is the brainchild of Third Rock Ventures, which founded it in 2008, and then joined with Fidelity Biosciences in 2011 for a $40 million Series A round. Third Rock now holds 41.8 percent stake before the IPO, while Fidelity’s Beacon Bioventures Fund III carries a 13.4 percent slice. All its other backers have less than a 5 percent portion of the startup.
Blueprint is focusing on creating kinase inhibitors to fight cancer, using high-speed DNA sequencing to find new genetic sources (and resources against) cancer. Its main candidates are BLU-285, the D816v mutation of the c-Kit gene, and BLU-554, which focuses on GI tract tumors and abnormal cell growth. Both will see their very nascent first trials in mid-2015 and investors are clearly hoping to get in on the action early.
Blueprint is entering the market at an interesting time. New data from the Exit Poll report by Thomson Reuters and the National Venture Capital Association on April 6 shows that initial public offerings dropped 54 percent during the first quarter of 2015, with a 58 percent decrease in dollars invested in the 17 offerings, 13 of which were life sciences IPOs.
Overall, the 17 venture-backed IPOs raised $1.4 billion during the first quarter of 2015, with life sciences IPOs representing 76 percent of total listings in the first quarter.
“This quarter marked the first quarter to see less than 20 venture-backed IPOs since the first quarter of 2013,” said the report.
“For the first quarter of 2015, 86 venture-backed M&A deals were reported, 16 of which had an aggregate deal value of $2.1 billion. Venture-backed M&A activity during the quarter fell to its lowest levels, by number of deals and disclosed value, since the first quarter of 2013.”
It’s been a rocky ride on the capital markets as well, with the some exchange-traded funds, like iShares Nasdaq Biotechnology Index Fund losing as much as 2.23 percent during the past week alone. Those loses have trimmed a nearly three-fold gain in the NBI since 2012, and may be indicative of investor caution as venture capitalists sit on the sidelines and wait for volatility to die down.
“With such a blistering pace for venture-backed exit activity in 2014, it was only a matter of time before we saw a drop activity. Despite the decline in venture-backed IPOs for the quarter, a lot of promising young companies made their debut on the public markets with many more waiting in the wings,” said Bobby Franklin, president and chief executive of NVCA.
There were also a few notable pull-outs from companies that decided to wait until the market was at a higher point, a common tactic used by corporate boards to make sure their IPO gets the maximum amount of value possible. Among those were Koltan Pharmaceuticals and Israeli company PolyPid Ltd. , which in a terse statement the Petach Tikva, Israel-based firm said it would withdraw its plans for the $20 million IPO, which had been priced at a range of $10 to $12 a share.
There had been rumors that a recent selloff in the biotech sector, which has dropped 7 percent the last week in march, and thus would have value the company at a lower amount, pushed PolyPid to pull its IPO. But Asaf Bar, chief business officer, told the Wall Street Journal other factors were in play.
“We were very confident with our ability to go public even with the market conditions,” he said. Bar added the company will wait for its pipeline milestones in the second half of 2015 before attempting another IPO.
Cheerleaders for the industry also remained sanguine about the near halving of the offerings on tap last quarter, saying that with investment happening at such a rapid and unprecedented clip in 2015, some pullback was inevitable—though likely not permanent.
“With 54 venture-backed companies having already filed publicly for IPOs and many more confidential registrations already in place, we are optimistic that the pace for venture-backed exits will pick up steam as the year moves ahead, creating opportunities for everyday investors to be shareholders of innovation,” said Franklin.