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Alumis and Upstream Bio, two U.S. startups developing drugs for inflammatory diseases, have filed for initial public offerings as dozens of biotech companies prepare to go public this year, according to people familiar with the matter.
The biotech companies have both filed private filings with the U.S. Securities and Exchange Commission in recent months, with a public offering expected before the November presidential election, which investors fear could roil markets, the people said.
After being approached for comment by the Financial Times, Alumis announced plans to list on the stock exchange on Friday.
Dozens more life sciences companies have filed confidentially for the US biotech IPO market, undeterred by the poor performance of the 11 listings so far this year, according to advisers.
Alumis closed a $259 million funding round earlier this year — its largest of the year — at a valuation of about $1 billion, according to PitchBook, reflecting investor hype surrounding its lead drug, which targets severe plaque psoriasis, a skin disease. Upstream’s lead drug helps treat severe asthma and is currently being studied in mid-stage trials. Both companies would likely list on Nasdaq, home to most biotech stocks.
The IPO market has been slow to recover after a sharp market decline and rapid interest rate increases that pushed most deals into 2022, although there have been tentative signs of improvement in recent months.
Biotech companies have raised $1.7 billion through U.S. IPOs so far this year, up 64 percent year-over-year, according to Dealogic data. Fundraising by previously listed companies has recovered more quickly, with so-called follow-on deals increasing by more than 100 percent year on year to $16.5 billion.
A revival of follow-up ads is often seen as a key requirement to encourage riskier new listings.
Mike Perrone, a biotech analyst at RW Baird, said the listing market was much healthier than for most of the past two years. But he warned that investor enthusiasm had waned in the second quarter as traders lowered expectations about how quickly the Federal Reserve will cut rates.
“People are a bit more cautious when it comes to new ideas. . .[new listings]will have to price in a way that is attractive to new investors,” he said.
Most biotech companies that have listed in the US so far this year are trading below their IPO prices. However, bladder cancer specialist CG Oncology was a notable exception, with an increase of approximately 80 percent.
Johnson & Johnson-backed neuroscience startup Rapport Therapeutics also had a strong start as a public company on Friday, raising $136 million and up 22 percent on its first day of trading. Australia-based Telix Pharmaceuticals also plans to list on the Nasdaq in the coming weeks.
Given the patchy performance of recent deals, Perrone added that IPO candidates with less urgent financing needs could choose to delay listing until after the presidential election, and until when there is more clarity on rate cuts.
Filing a confidential public filing with the SEC does not obligate a company to go public within a specific timeline, but it would allow Alumis and Upstream to quickly go public if a window opens. Alumis and Upstream declined to comment.
Alumis could also attract some strategic interest before it goes public, as its lead drug is in late-stage testing and major pharmaceutical groups are on the hunt for drugs to replenish their pipelines.
“Anyone with a phase three asset has a big target on their back. . . for obvious reasons,” said a person familiar with the company’s thinking.