Montreal cancer-treatment developer Repare Therapeutics Inc. is set to go public on the Nasdaq exchange on the heels of striking a blockbuster partnership with pharmaceutical giant Bristol Myers Squibb Co.
Late Friday, Repare filed its registration statement publicly with the U.S. Securities and Exchange Commission for an initial public offering of US$100-million worth of common shares. The IPO will be co-led by U.S. investment banks Morgan Stanley & Co., Goldman Sachs & Co., Cowen & Co and Piper Sandler & Co.
The filing comes a day after the Globe reported Repare’s plans to disclose its intentions to go public in the near term.
If successful, it would be the first Canadian biotech IPO on the premier exchange for early stage drug developers since Montreal’s Milestone Pharmaceuticals Inc. went public last May, and comes after a pair of cross-listings on Nasdaq by TSX-listed Canadian drug developers Bellus Health Inc. and Profound Medical Corp. last year. Mr. Segal declined to comment or confirm any details about a potential offering when reached by The Globe earlier in the week.
This has been a particularly strong year for the U.S. biotech sector, beyond heightened investor interest in companies developing treatments for COVID-19. Newly issued stocks of developers Black Diamond Therapeutics Inc., ADC Therapeutics SA, Zentalis Pharmaceuticals Inc., Revolution Medicines Inc. and others have spiked by 75 per cent or more over their IPO prices. The gains have been partly fuelled by investors piling into early stage companies they see as having the potential to grow into pharmaceutical giants – or sell out to them.
In addition, funds that invest in biotech have seen net inflows of US$10-billion in the past six weeks, according to Piper Jaffray. The Nasdaq Biotechnology Index is up by more than 10 per cent this year, well ahead of the overall Nasdaq, the S&P 500 and S&P/TSX Composite indexes.
Canada’s biotechnology sector has flourished in recent years, with companies raising a record $921-million in venture financing last year and two companies with Canadian operations, Clementia Pharmaceuticals Inc. – formerly led by Mr. Segal’s wife Clarissa Desjardins – and BlueRock Therapeutics, selling to foreign drug companies in deals valuing each at US$1-billion.
Several Canadian companies, including Vancouver’s AbCellera Biologics Inc., have raised nine-figure sums from investors to fund their development, while lupus drug developer Aurinia Pharmaceuticals Inc. this week filed the first new drug application in several years by a Canadian firm with the U.S. Food and Drug Administration, after positive human trial results last year.
But Canadian institutional investors – other than a handful of Quebec institutions including the Caisse de dépôt et placement du Québec and the Fonds de solidarité FTQ (Fonds) and a smattering of Canadian venture capital funds including Lumira Ventures and Amplitude Venture Capital – have largely sat out the boom in Canadian biotech, which has been tied to global trends in drug discovery, such as the development of medicines targeting genetic defects and the use of artificial intelligence in preclinical research.
By contrast, San Francisco-based Versant Ventures, an early Repare backer, has also had a string of successes here, selling three of its early Canadian investments – in BlueRock, Northern Biologics and Inception 4 – for an average five-times return on investment.
But it is still a highly speculative sector characterized by extremely high risks and rewards and requiring years of costly research and development. For example, cardiovascular treatment developer Milestone saw its stock drop by nearly 90 per cent in March after it reported disappointing human trial results.
Repare, co-founded by researchers from New York University and Toronto’s Mount Sinai Hospital, fits the profile of other biotech companies that have gone public at similar stages. The company, which is aiming to create “precision oncology “ drugs that attack genetic defects in cancerous tumors, preventing toxic cells from repairing their DNA, raised US$82.5-million last year from several so-called “crossover” investors that typically back both private and public biotech companies, including Cowen Healthcare Investments, OrbiMed, Redmile, BVF Partners and Logos Capital, as well as Versant, MPM Capital, the Fonds and Amplitude Ventures, which bankrolled a US$68-million financing in 2017. According to the registration statement, Versant is Repare’s largest shareholder, with a 30.1-per-cent stake before the offering.
This is a pivotal year for Repare, which aims to get its lead drug candidate into human clinical trials this summer. On Tuesday Repare said it had struck a research collaboration deal with Bristol Myers Squibb (BMS) that will see the two work together to identify cancer drug candidates. BMS agreed to pay US$65-million upfront, including a US$15-million investment in Repare. The Montreal company can earn up to US$3-billion if the drugs pass a series of development milestones and become commercial products.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.