Lexeo’s $100 Million IPO: Jab in the Arm for Biotech?

Lexeo’s $100 Million IPO: Jab in the Arm for Biotech?

- in FOREX TRADING, Investments, MAKE MONEY, TRENDING
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It’s been nothing but crickets in the biotech initial public offering (IPO) space this year, but investors who are hungry for a new pharma play finally have a deal coming down the pipeline to consider.

On Friday, September 29, Lexeo Therapeutics filed with the Securities and Exchange Commission (SEC) with plans to launch on the Nasdaq under the ticker “LXEO.” No pricing terms for the deal were revealed, instead registering with the placeholder sum of $100 million.

Lexeo develops gene therapies for cardiovascular and neurological diseases. It booked $1 million in grant revenue for the 12 months ending on June 30, 2023. 

No launch date has been announced, per the prospectus. Lead underwriters for the deal include J.P. Morgan, Leerink Partners, Stifel, and RBC Capital Markets.

The New York-based firm was founded in 2017 and claims its mission is to “transform healthcare by pushing boundaries in developing meaningful gene therapies for diseases, regardless of prevalence.”

Dual Candidacy 

Lexeo’s cardiovascular drug candidate, named “LX2006,” targets Friedreich’s ataxia (FA) cardiomyopathy. The drug is undergoing a Phase 1/2 trial, and Lexeo plans to release data from the trial by mid-next year. 

Its other main drug, named the LX1001, is being developed to treat APOE4 homozygous patients with Alzheimer’s disease. It is also going through Phase 1/2 trial, and Lexeo expects to complete enrollment in the trial by the end of this year and report data from the trial in the second half of 2024.

There is another cardiovascular product on the way – LX2020. This treats arrhythmogenic cardiomyopathy, which is caused by PKP2 mutations. LX2020 received investigational new drug clearance from the U.S. Food and Drug Administration in July. Lexeo expects to start its Phase 1/2 clinical trial for this candidate in the first half of 2024.

No Stomach for Bio? 

This year’s IPO market has still not fully recovered after 2022’s historic collapse in new listings. Yet, if IPOs in other sectors still feel under the weather, biotech IPOs have been chronically ill.

In the first half of 2023, only nine biotech companies have gone public, making it the slowest IPO year for the industry in at least six years, per BioPharma Dive data. (Even in the first half of 2022’s historic market rout, 14 drugmakers had made it to market).   

In a sign of the more cautious times, David Diamond, managing director at business consulting firm CBIZ MHM, recently told industry publication BioSpace that investors are now looking for data from Phase II or even later-stage studies to ensure they are investing in companies with effective assets.

Investors will have to weigh up the potential profitability of Lexeo’s drug candidates and how the recently dampened market mood may impact this deal.

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