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The 2022 market downturn has affected businesses across industry verticals, and the biotech sector is no different. The downturn in the global equity markets and the fading investor interest in biotech firms have also caused a slowdown in the IPO market. Notably, the volatile market conditions meant that many players in the segment have kept their distance from the public offering.
While the biotech IPO market picked up some pace in Q3 2022, the overall conditions are still far away from being attractive.
In the current macroeconomic environment, many biotech firms have preferred to stay private than public. However, when it comes to the gene editing segment, some of the firms are having a different approach. For instance,
Prime Medicine is looking at the Nasdaq stock exchange for a public offering. While the financial terms of the public offering have not been made clear by the firm yet, the management is estimating an IPO of approximately US$200 million. This means that the Prime Medicine IPO will be one of the largest public offerings in the gene editing space in 2022. Furthermore, it is probably the largest public round for a preclinical biotech firm.
To date, Prime Medicine has also raised US$315 million, which includes a Series A round of US$115 million and a Series B round of US$200 million. As of June 2022, the firm has a cash reserve of US$180.6 million and the proceeds from the public offering will further boost its cash position. Part of the capital from the IPO is expected to go toward manufacturing and the development of a dedicated chemistry facility.
Furthermore, the firm is also planning to use the proceeds from the public offering to fund its research and development. Notably, Prime Medicine has a pipeline of 18 programs. However, all of these are in the very early stages of development. The sickle cell disease gene editing therapy, developed in strategic collaboration with Beam Therapeutics, is the only one with preclinical data. With so little data on hand, it is unclear whether investors will show an appetite for the gene editing firm under the current macroeconomic environment.
However, there is much optimism in the space when compared to other biotech-focused firms. A number of gene editing startups have raised funding rounds in 2022, including Inari, which raised US$124 million under a Series E funding round in October 2022. Furthermore, despite the downturn in the market, gene editing startups have continued to grow in strong numbers. Notably, ChristanaCare launched its first commercial biotech firm, CorriXR Therapeutics, which will use gene editing technology to develop therapies in areas of unmet medical needs.
All of these activities and the growing interest from venture capital firms in the gene editing space reflects the growth potential of the sector over the next three to four years. While the biotech IPO market is expected to remain dull in Q4 2022 and Q1 2023, the optimism in gene editing technology can further revive the public markets in 2023.
