Caribou Biosciences wary of testing public markets during election year, executive says
08 October 2019
Caribou Biosciences will consider testing the public markets in 2020 but a highly charged political atmosphere may keep it on the sidelines, Chief Business Officer Timothy Herpin said.
The Berkeley, California-based biotechnology company views an initial public offering as the logical next step after a private round of financing that Herpin said it wants to close this year.
But investor appetite for risk tends to diminish in election years, often slowing down IPO activity. Healthcare will be especially scrutinized, Herpin noted, as progressive presidential candidates like Elizabeth Warren and Bernie Sanders stump for more industry regulation. The Democrats as well as President Trump, a Republican, have pledged to lower prescription drug prices.
Advisory firm Westwicke recently analyzed life sciences IPO activity since 2007 and found that presidential election years saw an average of 12 life sciences IPOs per year versus an average of 30 in a non-election year. Moreover, in an election year, the average life sciences IPO raised USD 70m compared to USD 103m raised in a non-election year — a 33% decline.
Caribou has been keeping an eye on the public markets, which have been choppy in recent weeks. Citing adverse market conditions, Swiss biotech firm ADC Therapeutics pulled its plan for a USD 200m IPO last week, Herpin observed. Similarly, Wilmette, Illinois-based biotech firm Monopar Therapeutics shelved its plan for a USD 40m IPO last week.
Three other biotech companies did go public last week with mostly positive results. Viela and Aprea Therapeutics raised USD 172.6m and USD 97.75m, respectively, and both are trading above their IPO prices. Frequency Therapeutics raised USD 84m in a downsized IPO last week, pricing its shares at USD 14, at the bottom of its price range. Frequency’s shares were trading at the USD 14 IPO price on Tuesday.
Genome-editing company Precision BioSciences, which listed in March, is viewed as a comparable company to Caribou, according to Herpin. Precision raised USD 145m after pricing its shares at USD 16 but its stock was trading at around USD 7.50 at Tuesday’s close.
Editas, Crispr Therapeutics, Calyxt and Intellia Therapeutics are other Caribou comps, this news service has reported.
Cambridge, Massachusetts-based Intellia, which has a USD 540m market cap, spun out of Caribou in 2014. Caribou owns approximately 7% of Intellia’s stock.
Since it was founded in 2011, Caribou has raised USD 41.5m in financing from Novartis, Pontifax Agtech, Mission Bay Capital, Maverick Capital Ventures, Heritage Group, F-Prime Capital Partners, Anterra Capital and other investors.
Legal advisor Mintz, Levin, Cohn, Ferris, Glovsky and Popeo represented Caribou in its last capital raise. Caribou has relationships with various banks that Herpin says it uses “on an ad-hoc basis.”
Founded by a team of biochemists including Jennifer Doudna and Martin Jinek, Caribou is a pioneer in CRISPR (clustered regularly interspaced short palindromic repeats) technology.
In addition to offering high-specificity gene-editing technology, Caribou develops ex vivo cell therapies for immune-oncology; and it has engineered gut microbes to produce therapeutic metabolites, after drug efficacy, that it says can modify the impacts of chronic disease.
