Growth Hormone Biotech Ascendis Pharma A/S Files For A $86 Million IPO

Growth Hormone Biotech Ascendis Pharma Files For $86 Million IPO
December 19, 2014
By Riley McDermid, Breaking News Sr. Editor

Danish growth hormone producer Ascendis Pharma will take its company public, saying in an S-1 filing with the U.S. Securities and Exchange Commission this week that it will raise up to $86 million towards an IPO, one of the largest for a biotech company this year.

Hellerup, Denmark-based Ascendis said it will list on the NASDAQ under the symbol ASND and will use BofA Merrill Lynch and Leerink Partners are the joint bookrunners on the deal. Pricing terms or the number of shares were not disclosed.

Ascendis founded in 2006 and initially filed confidentially in August.

The company will join a long parade of biotechs going public this fall and winter, though some have been able to reach their price targets and some have withdrawn because they could not.

A similar sized peer of Ascendis, Vernalis, managed to raised $126 million for its IPO last spring, gaining 49 percent on its first day, but it now trades 9 percent below its original offer prices.

There has been a lot of controversy among analysts over whether or not such a large group of IPOs is necessarily good for the biotech sector.

The current rate of biotech companies going public is beginning to be felt by the industry to be the “new normal” despite the increasing number of IPOs that debuted in 2014, said Geoffrey Porges, senior biotech analyst at Sanford Bernstein earlier this month.

In a note titled “Biotech: Revisiting the IPO Class of 2012-14,” Porges said that the unprecedented flow of capital to the industry during this period has contributed to the number of biotechs going public, with over 100 IPOs completed between the first quarter of 2012 and the third quarter of 2014. Those offerings saw nearly $7 billion in IPO capital raised, a historical high for the industry.

“In fact many investors and industry executives have come to regard the present state of liberal capital flows to the industry as the ‘new normal,’ rather than a temporary ‘window’ as in the past,” wrote Porges. “The 2012-14 biotech financing window has reached records in duration, volume and number of deals, producing over 100 new biotech companies.”

It might not all be good news, however—Porges stressed that while IPO volume is still high, there are signs that performance of “new issues” is deteriorating.

“The number of companies seeing positive returns from S-1 [filing] to first opening price declined from 90 percent in the earlier part of the window to 75 percent and 57 percent for the second quarter 2014 and third quarter 2014 cohorts,” said Porges. “Two thirds of third quarter 2014 IPOs underperformed S-1 price one month after IPO.”

Perhaps more importantly, companies are coming to market with “little or no clinical data,” and the size of issues and issuers is decreasing. “This suggests that the quality of new issuers is falling, or investor interest is waning, or both, but January could offer a rebound,” said Porges in his note.

Size also remains an issue. Most of the new public biotechs are still “relatively small” companies with market capitalizations below $500 million. Of those, roughly 94 percent of the IPO class had a market cap lower than $500 million at the time of IPO, with nearly two thirds worth less than $500 million.

Certain areas remain bright spots for all investors and venture capitalists, however. Oncology remains the biggest therapeutic area for “this wave of biotech companies, but more recent issues” are somewhat more diversified.

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