IPO Hopes Rise for Biopharma Investors

Venture capital firms Bios Partners and Kairos Ventures own big stakes in Actuate Therapeutics, which has set the terms for its upcoming IPO.

Illustration by II

Illustration by II

The biopharma IPO market continues to heat up.

In the past few weeks, one company set terms for an upcoming initial public offering and a second filed preliminary plans. And yet another fledgling biopharma company has seen its stock surge since it went public less than two weeks ago.

It helps that the overall stock market is up by double digits this year. However, the biopharma sector has not fared nearly as well: The Nasdaq Biotechnology Index has climbed just 3 percent, and the SPDR S&P Biotech ETF is up 2.8 percent. And Institutional Investor recently reported that a number of hedge funds specializing in biopharma and life sciences stocks are in the red through the first five months of 2024.

Nevertheless, Actuate Therapeutics, which is working to develop therapies for high-impact, difficult-to-treat cancers, last week set terms for a planned IPO. The clinical-stage biopharmaceuticals company will offer about 5.6 million shares of common stock for between $8 and $10 per share. At the midpoint, the company would raise about $50 million.

Currently, two venture capital firms own a majority of the shares: Bios Partners is the largest shareholder, with 55 percent, and Kairos Ventures owns 17 percent.

Meanwhile, Alumis, a clinical-stage biopharma company developing oral therapies to treat patients with immune-mediated diseases, filed initial plans to go public. Three investment firms — including one hedge fund — are each listed as owners of at least 5 percent of the shares, although their specific stakes are not included. They include entities affiliated with hedge fund firm Baker Brothers Life Sciences.

Just three months ago, Alumis completed its most recent private fundraise when it announced an upsized $259 million Series C financing co-led by existing investor Foresite Capital and new investors Samsara BioCapital and venBio Partners. The fundraise included a slew of new investors, including life sciences hedge fund firm Cormorant Asset Management.

Actuate and Alumis are likely optimistic about the IPO, given the success of the recent offering by Rapport Therapeutics. On June 6, Rapport priced its shares at $17 apiece, the halfway mark of the planned $16-to-$18 range. Since the shares began trading, they have soared about 43 percent. The clinical-stage biopharmaceuticals company is developing small-molecule medicines for patients suffering from central nervous system disorders.

Before the IPO, entities affiliated with Cormorant owned 6.62 percent of the shares, according to a regulatory filing. In August 2023, Cormorant led a $150 million Series B funding round, according to a press release at the time. In announcing that financing, Rapport noted that Raymond Kelleher, who has been managing director at Cormorant since July 2020, had been appointed to the board of directors. But in the IPO filing, Rapport said that Kelleher planned to resign from the board immediately, before the registration statement was in effect. The company stressed that the resignation was “not due to any disagreement with us or any matters relating to our operations, policies, or practices.”

Other hedge funds also previously invested in Alumis. Perceptive Advisors, Surveyor Capital (a Citadel company), and Logos Capital participated in the Series B financing. None of the three, however, was listed in the regulatory filing connected with the IPO as a 5 percent owner.