The drought in Massachusetts biotech IPOs is over. But there’s a caveat.
While a pair of Cambridge-based cancer drug developers sold their shares last week in the first initial public offerings since January, there was little evidence their success was a harbinger of a new stampede of local biotechs into the public markets.
Shares of Mersana Therapeutics Inc. and Aileron Therapeutics Inc., both considered companies that are working with cutting-edge technology, ended the week below their $15 offering prices after getting caught in Thursday’s downdraft of stocks listed on the Nasdaq exchange.
Mersana’s shares closed Friday at $14.07 on the Nasdaq, down 6.2 percent from the offering price; Aileron’s shares closed at $11.15, down 25.6 percent.
Another biotech scheduled to price its shares last week, Akcea Therapeutics Inc., also of Cambridge, postponed its offering, but remains poised for an IPO that could raise as much as $125 million. The company, which is developing treatments for metabolic diseases caused by lipid tissue disorders, is owned by California drug maker Ionis Pharmaceuticals Inc.
Akcea gave no reason for its delay. But the company’s public fund-raising target was ambitious in a week when volatility returned to financial markets. Its proposed haul is substantially larger than the $75 million raised by Mersana — which is developing a class of medicines known as antibody drug conjugates to treat different cancers — and the $56.2 million raised by Aileron, which is developing a treatment called stapled peptides to fight cancers and other diseases.
“Investors have become more cautious,” said Mersana chief executive Anna Protopapas, who plans to use the money raised to advance the company’s lead drug candidates over the next 24 months. “A lot of investors are still looking at health care, but they are being more selective.”
Aileron chief executive Joe Yanchik said the increased selectivity may be healthy for the industry because companies will need to demonstrate that they have a reasonable chance of succeeding. Earlier this month, Aileron reported findings from an early-stage clinical trial of its lead experimental drug showing safety and early indications of effectiveness in patients with multiple types of cancers.
“The bar is higher,” Yanchik said. “In this market, you have to show that something works.”
While investors have grown more confident drug makers will be able to dodge government price controls, which was viewed as a potential threat at the start of 2017, “there’s still a huge amount of uncertainty in the country on a political and economic level,” said industry consultant Jonathan P. Gertler, chief executive of Back Bay Life Science Advisors in Boston.
Gertler said the five-month lull in Massachusetts biotech IPOs — following several years of heavy activity with many companies going public — may have been broken not because of a change in the market’s dynamics, but simply because a couple of promising companies wanted to complete their offerings before the July Fourth weekend.
“It’s a rational but strong market,” Gertler said. “The days when you’re going to have a nuclear winter around biotech are behind us. It’s incredibly quiet relative to the robust years, but good fundamental companies are still going to be able to get out into the public market.”
Before last week, the state’s last biotech IPO came on Jan. 27 when another Cambridge cancer drug startup, Jounce Therapeutics Inc., raised $104 million. Myomo Inc., a Cambridge medical robotics company, raised $5 million in an IPO earlier this month. There were 10 life sciences IPOs in Massachusetts last year, including those of three drug developers using gene-editing technology.Robert Weisman can be reached at email@example.com. Follow him on Twitter @GlobeRobW.