Enanta, Tetraphase Go Public in Boston Biotech IPO Madness
If Boston biotech were playing in this week’s NCAA men’s basketball tournament, it would have to be a No. 1 seed. It’s not every week that a region gets to claim that two of its biotech companies went public, and neither one immediately crashed.
This week, the local cluster saw two little companies from Watertown, MA, grow up and spread their wings to become publicly traded, liquid stocks. These IPOs, the only ones in the biotech industry this month, were for Enanta Pharmaceuticals (NASDAQ: ENTA) and Tetraphase Pharmaceuticals (NASDAQ: TTPH).
Enanta is best known for its development of hepatitis C drugs in collaboration with Novartis and AbbVie. Enanta sold 4 million new shares to investors at $14 apiece, meaning it hauled in gross proceeds of $56 million of cash to support its drug development programs.
JP Morgan and Credit Suisse led the offering, while Leerink Swann and JMP Securities acted as co-managers. They definitely made some investing clients happy, as Enanta stock rose $2.50 a share, or 18 percent, by 1:50 pm Eastern time in its first day of trading. That rise means Enanta is starting out as a public company with a first-day market valuation of more than $275 million.
Tetraphase, a company we have written about a few times during its private company days, is seeking to make its mark as an antibiotic developer. Tetraphase sold 10.7 million new shares of stock at $7 apiece, which allowed it to rake in $75 million in gross proceeds. Like Enanta, Tetraphase has granted its underwriters a 30-day option to acquire more shares at the IPO price, so the total fundraising haul could run higher.
Barclays and BMO Capital Markets led this IPO offering, while Stifel, JMP Securities, and Needham & Co. worked as co-managers. The underwriters appear to have priced this one right in line with investor demand, as Tetraphase rose just 1 cent, to $7.01 at 1:38 pm Eastern time. Tetraphase’s first-day valuation is about $139 million.
Who will benefit from the stock sales? Enanta’s biggest shareholders heading into the IPO were mostly from out of town. TVM V Life Science Ventures was the biggest shareholder heading into the offering, with an 18.7 percent ownership stake, followed by OBP III at 15.6 percent ownership. Shionogi is next at 8.4 percent ownership, while AbbVie holds 7.1 percent of the equity in Enanta, according to filings with the Securities and Exchange Commission. CEO Jay Luly had 5.6 percent ownership of the company going into the offering.
Tetraphase has some more familiar names on its capitalization table. Flagship Ventures and CMEA Ventures were the biggest stockholders heading into the IPO, with 17.1 percent ownership apiece. Skyline Ventures owned 16.5 percent of the company heading into the IPO, while FMR held 16.4 percent, Mediphase Venture Partners held 15 percent, and Excel Medical Fund had 10.6 percent, according to filings with the SEC. CEO Guy Macdonald held a 3.6 percent ownership stake going into the offering.