Categories Health Care, IPO

IPO News: What to look for when Elevation Oncology makes its Wall Street debut

The company plans to offer 6.3 million shares at a price of $15-17 per share, to raise about $100 million

The healthcare sector is going through a phase of consolidation, creating fresh opportunities for emerging companies in a market that is slowly recovering from the pandemic. Several pharmaceuticals firms have taken the IPO route to scale up their business, and Elevation Oncology is the latest to join them.

The New York-headquartered cancer drug startup was founded in 2019 by Shawn Leland, who also assumed the role of Chief Executive Officer recently. Originally incorporated as 14ner Oncology, Inc., the name was changed to Elevation Oncology in February last year.

To Offer 6.3 Mln Shares

The company submitted a proposal to the Securities and Exchange Commission, seeking to list on the Nasdaq Global Market under ticker symbol ELEV. The offering is tentatively scheduled for June 25, 2021. The management plans to offer 6.3 million shares at a price of $15-$17 per share, raising up to $100 million. That would value the company at $403 million. The team of underwriters managing the offering will be led by J.P. Morgan Chase (NYSE: JPM) and Cowen.

Read management/analysts’ comments on quarterly results

Elevation Oncology develops cancer therapies with focus on genomically defined patients. The proceeds from the offering, together with existing cash and cash equivalents, will be mainly used for the ongoing clinical trial on its lead product candidate seribantumab, a formulation originally developed by Merrimack Pharmaceuticals Inc. for the treatment of advanced solid tumors harboring NRG1 fusion. Currently, there are no approved therapies specifically to treat such patients, and the prognosis for them is very poor.

The Lead Candidate

The company acquired seribantumab two years ago after it failed to yield the desired results in a series of studies. Data from a phase-II study on the anti-HER3 monoclonal antibody is expected later this year and the final outcome of the trial in the first half of 2023. The company has invested all of its financial resources and efforts in the clinical development of seribantumab. So far, it has raised about $94 million through multiple stock offerings to fund the program.

The company seeks to expand precision medicine to all areas of cancer therapy. Oncogenic driver alterations with the potential to be drugged are identified through a capital-efficient approach and therapies are developed to specifically target them.

Pros and Cons

While its unique model gives the company a competitive advantage, the final outcome of the seribantumab trial would be crucial. Meanwhile, there are concerns that pandemic-related issues could negatively impact the conduct of ongoing trials. Being a loss-making entity that is yet to generate revenue, the availability of funds would be a deciding factor even after the public offering as far as sustainability is concerned.  

After defying pandemic, IPO market is bracing for another busy year

For the three months ended March 31, Elevation Oncology reported a net loss of $5.1 million or $6.36 per share, wider than last year’s loss of $1.9 million or $2.48 per share. In the whole of fiscal 2020, net loss widened sharply to $17.3 million or $21.8 per share. The company is likely to continue incurring losses in the near future as it does not expect to generate revenue until any of the product candidates obtain marketing approval.

Looking for more insights on the earnings results? Click here to access the full transcripts of the latest earnings conference calls!

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