Biotech's Hot Streak Continues with Aimmune IPO

Brisbane, California-based Aimmune Therapeutics (NASDAQ:AIMT) continued the streak of successful biotech IPOs on Thursday with a $160-million IPO.

The company sold 10 million shares priced at $16 each, exceeding expectations for the number of shares sold and reaching the high end of its target price. The stock opened at $17.50 and reached a high of $27 before noon. By market close, Aimmune’s share price was trading at $24.10 and had risen 50.63 percent over the course of the day.

Financial overview

The Silicon Valley Business Journal reported that Aimmune, once known as Allergen Research, previously raised $80 billion in a Series B round of funding. This funding followed a successful mid-stage study for its experimental peanut allergy treatment. Two years prior to that, the company raised $17 million via a Series A round of funding.
Aimmune’s biggest shareholder is Longitude Venture Partners at 23 percent, followed by Foresite Capital, Sunshine Charitable Foundation, Fidelity, Food Allergy Research & Education, Explore Holdings, Dr. Bryan Wasler and Aislng Capital. As of March 31, the company had cash and equivalents of $65.3 million, and an accumulated deficit of $21 million.

Potential breakthroughs for peanut allergies

Aimmune investors are putting their bets on AR101, a drug that seeks to desensitize peanut allergies. According to Fierce Biotech, this drug falls into the category of oral desensitization immuotherapies, and works by using peanut proteins to train overactive immune systems into ignoring them. There is an enormous market for this drug, should it be successful — with approximately 2 million people suffering from peanut allergies in the US and Europe alone, peanut allergies are big business.
Its future appears promising. Two months ago, Aimmune reported positive data from a mid-state desensitization study. All 23 participants were able to tolerate increased exposure to peanut protein, with 100 percent of participants tolerating 443-milligram cumulative amounts, and 78 percent tolerating exposure to 1,043-milligram amounts. The company is now on the threshold of a pivotal Phase III study. Other allergy drugs, including those for milk and egg allergies, are also in Aimmune’s pipeline.

A biotech bubble about to burst?

Some analysts fear that the biotech market’s hot streak may be over. MarketWatch reported that “biotechnology stocks are taking a beating Thursday, as a selloff in the broad market sends investors scurrying from riskier sectors. Some chart watchers see warning signs that the sector’s long run of outperformance may finally be near an end.” In particular, the SPDR S&P Biotech ETF (NYSEARCA:XBI) fell by 5.07 percent, or $13.
However, Aimmune’s successful IPO suggests that this negative outlook may not be entirely accurate. It joins 16 other Silicon Valley-based IPOs so far this year, including NantKwest’s (NASDAQ:NK) record-breaking $2.6-billion IPO. Aimmune’s strong IPO indicates that investors aren’t giving up on biotech just yet, and that there still may be enormous potential for growth in this risky industry.
 
Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.

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