LB Pharma breaks biotech IPO dry spell
LB Pharmaceuticals secured a much-needed US$285m late Wednesday from its upsized Nasdaq IPO, the first US biotech new issue since February.
Leerink Partners, Piper Sandler and Stifel priced 19m shares at US$15, midpoint to the US$14–$16 range and increased from 16.5m shares.
The biotech sold 84.3% of shares outstanding, with more than half of the IPO shares (60%) going to just 10 institutional investors.
“Allocations favoured new sector-dedicated investors who submitted non-binding indications of interest during testing the waters," said a banker who worked on the deal.
Aftermarket trading activity suggested a tight placement as LB shares rose 15.3% to US$17.30 on light trading volume of 3.7m shares during Thursday's session.
LB, which had only US$14m of cash at June 30, needed the money to fund an upcoming Phase III trial of its promising schizophrenia drug.
The FDA already approved the design and target endpoints, clearing a path for LB to launch the study later this year or in early 2026.
The new funding came at a high price, marking a hefty down round from its previous US$75m Series C round in January last year.
To help ensure a successful outcome, backers Deep Track Capital, Pontifax, TCG Crossover and Vida Ventures partially waived anti-dilution provisions that reset the conversion price of their Series C preferred shares to US$36.55 from US$41.83.
Notably, LB is the first biotech IPO (above US$50m) since Aardvark Therapeutics raised US$94m in mid-February and just the fifth priced this year.
Investors did well on previous biotech IPOs from Metsera (+102.8%), Maze Therapeutics (+55%) and Sionna Therapeutics (+32%) but less so with Aardvark (-50%).
LB laid out some clinical milestones for the next 12 months that may support future stock gains. In addition to the Phase III trial in schizophrenia, LB hopes to launch a Phase II trial for the same drug for patients with bipolar depression early next year.
It also sees potential for the same drug in treating major depressive disorder and as an antipsychotic for Alzheimer’s patients.