IPO Alert: Third Harmonic files to go public. Here’s what you need to know

IPO activity has started gaining steam after falling significantly in the first half, in line with the global trend, but it is unlikely to match last year’s record highs. While the rebound is led by finance and healthcare technology companies, a full recovery looks a long way off. The latest among the major IPO aspirants that have filed documents with the SEC include Third Harmonic Bio, a clinical-stage healthcare firm offering oral KIT inhibitor for the treatment of severe allergy and inflammation.

The Offering

It is worth noting that not many biopharma companies went public this year. Third Harmonic is looking to raise approximately $150 million by selling common shares in an initial public offering. The team of underwriters will be led by Morgan Stanley. The management will reveal the size of the offering and price in future filings. The company has applied to list on the Nasdaq Global Market under the symbol THRD.

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Read management/analysts’ comments on quarterly reports

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Currently led by Natalie Holles, who has been serving as the chief executive officer for more than a year, the company was founded by venture capital firm Atlas Venture in 2019. For the Cambridge-based firm, the main priority is the further development of intellectual property licensed from Novartis AG (NYSE: NVS), which is part of its investor syndicate.

Net proceeds from the offering will mainly be used for the development of THB001 for various indications — Third Harmonic’s lead candidate for the treatment of dermatologic and respiratory conditions — and expansion of the remainder of its pipeline, besides general research and development activities.

Pipeline

To a large extent, the long-term prospects of the business would be influenced by results from early-stage trials on THB001. Currently, multiple studies on the formulation are progressing – preclinical and phase-1 – for conditions like chronic inducible urticaria, chronic spontaneous urticaria, and asthma. Initial results from the phase-1b trial for chronic inducible urticaria are expected by the second half of 2023.

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After successful development, these treatments are expected to find a large market and expand steadily over the years. Meanwhile, the company did not generate revenues in the six months ended June 2022, like most clinical-stage biopharma firms. It incurred a net loss of $15.46 million, mainly reflecting costs related to research and development.

Road Ahead

Going forward, competition from industry leaders like Johnson & Johnson (NYSE: JNJ) and relatively smaller players like Teva Pharmaceutical Industries Ltd (NYSE: TEVA) would be a major challenge facing the company. On the positive side, the global market for therapies targeting various types of urticaria is estimated to grow at a compound annual rate of about 10% through 2026. That should create enough space for all players to grow.