IPO News: What to look for when Eliem Therapeutics goes public?

Extending the IPO frenzy that sweeped the market in the early part of the year, emerging biotechnology companies continue to flock to Wall Street, lured by the booming stock market and unfolding business opportunities. Eliem Therapeutics, the latest among the Seattle area biotech firms to jump on the IPO bandwagon, is all set to go public this week.   

Unique Pipeline

Eliem is a clinical-stage biotechnology company engaged in the development of therapies for chronic pain and nervous-system-related disorders like depression and epilepsy. The company, which is developing a pipeline of clinically differentiated drug candidates, earlier raised a total of $140 million in multiple funding rounds. It was founded by Andrew Levin and Valerie Morisset in 2019. The present chief executive officer is Bob Azelby — a former executive of Juno Therapeutics.

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Read management/analysts’ comments on quarterly reports

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The biotech start-up recently summited a statement with the Securities and Exchange Commission, indicating its intention to list the stock on the Nasdaq Global Market under the symbol ELYM. The offering is tentatively scheduled for August 10, 2021. The underwriters in the offering are SVB Leerink, Evercore ISI, and Stifel Guggenheim Securities.

Revises IPO Terms

Meanwhile, the company this week revised the IPO terms, raising the number of shares being offerd to 6 million and slashing the offer price to $12.50 per share. The original plan was to offer 4.5 million shares at a price in the range of $17 per share to $19 per share. It expects to raise about $75 million from the offering, down from the initial target of $81 million.

ETX-810, one of Eliem’s lead candidates, is being developed for the treatment of diabetic peripheral neuropathic pain and sciatica. It is evaluated in two phase-II clinical trials, from which the top-line data is expected in the first half of 2022. The other clinical-stage drug, ETX-155, is being tested for the treatment of depressive disorders, perimenopausal depression, and focal onset seizures. Besides that, a preclinical pipeline with two discovery-stage programs is currently in progress.

Though its area of research looks mainstream, the company is treading a unique path with the goal of developing therapies that are safer and more effective than those currently available, leveraging its innovative mechanisms of action. The novel approach is significant, considering the growing population of elderly people and the need for better-tolerated therapies.

Risks

On the flip-side, like any other early-stage company, Eliem is in deficit, which is unlikely to change in the foreseeable future. It goes without saying that the company would need more external funding to continue its programs. Also, once launched, the drugs will be facing competition from several market leading brands in that segment.

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In fiscal 2020, Eliem did not generate any revenue due to the absence of marketable products. It incurred a wider loss of $22.95 million or $1.49 per share than $7.4 milliotn or $4.45 per share in fiscal 2019. That reflects a sharp increase in operating expenses to $20.9 million.