Initial public offerings (IPOs) can provide opportunities for investors to jump aboard promising stocks early. That's especially the case with biotech stocks that go public.
In this Motley Fool Live video recorded on June 30, 2021, Motley Fool contributors Keith Speights and Brian Orelli discuss two upcoming biotech stock IPOs you'll want to have on your radar.
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Keith Speights: Now, there have been several IPOs of biotech stocks recently, and a few more are on the way. Brian, are there any of these that you think investors should want to have on their radar?
Brian Orelli: IPOs lately have been really early-stage. Some like Sana Biotechnology (SANA 1.76%) are still in preclinical. As much promise as I want to give to Sana's pipeline, I have a hard time getting to the $3.4 billion valuation. It might be worth that much, but on a risk-adjusted basis, I just don't know.
I did find one that has filed an S-1, Candel Therapeutics, that's in phase 3 development; it's using nonreplicating virus to attack tumors. Other companies have tried this with limited success, but Candel's phase 2 data looks promising. It's already testing its drug called CAN-2409 in prostate cancer, and then it's planning phase 3 for brain cancer next year.
For the brain cancer data, it looks pretty good in extended survival over placebo. Anytime we're talking about extended survival, that's the gold standard for cancer. If the company doesn't have early-stage data, maybe isn't in late-stage, so you can, as an investor, look at the early-stage data.
Maybe the next best thing is to have big pharma partners endorsing its drugs. At least those big pharma partners have looked at the early-stage preclinical data. Vividion Therapeutics has filed to go public. They have two partners at Bristol Myers Squibb (BMY 0.27%) and Roche [Holding] (RHHBY 1.13%).
The company's claim to fame is that it's amassed a huge library of compounds, and it has a screening technology to help it find the needles in the haystack. Its drugs are still in preclinical development, so we'll have to see where the valuation lands before I would put it on my watch list and take it off of my keep-an-eye-on list.
The program with Bristol Myers Squibb is targeting STAT3. That's in the same pathway as JAK, which we've talked about a lot. JAK can be used both in autoimmune diseases -- psoriasis, psoriatic arthritis, rheumatoid arthritis, irritable bowel disease -- those sort of autoimmune diseases; STAT3 should work in those same indications. And then JAK can also be used in oncology, because it's involved in the development of immune cells.
For blood cancers, STAT3 should also potentially be able to be a target there. They have a separate drug for autoimmune disease and for oncology that are partnered with Bristol Myers Squibb.
Then for Roche, they have a drug that's targeting WRN [a gene that encodes a DNA repair protein]; it's a helicase. Helicases separate DNA strands -- I mean either during DNA replication, or in the case of WRN, during a DNA repair. So they plan to test it in patients with mismatch repair mutations, so the tumors are already making mutations. And then if they knock out or block the activity of WRN, then the tumors can't repair those mutations that they're making, and then hopefully the tumor will just die.
