Health

Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

If you're going to IPO a company based on red-hot but unproven technology, a bit of urgency helps. 

CRISPR DNA-editing technology has enough cultural cachet that Jennifer Lopez is executive-producing C.R.I.S.P.R., a high-concept NBC procedural revolving around the use of the technique as a bioweapon. It may ultimately be useful in treating genetic conditions. Or it may destroy the human race. But for investors, it's increasingly old hat. 

CRISPR Therapeutics this week became the third biotech focused on the technique to offer shares to the public this year. And it raised substantially less money than its predecessors, pricing shares at $14, well below the marketed range. It briefly popped 13 percent in its market debut on Wednesday, but it's currently trading below its IPO price.

The company may end up winning the race to commercialize the technique, but for now it could use a bit of work on its timing.

Poplet
CRISPR Therapeutics shares rose as the company made its public debut -- very briefly
Source; Bloomberg

This may not be the sort of IPO CRISPR Therapeutics hoped for back when it raised $140 million in its last fundraising round as a private company. It originally hoped to raise $66.2 million by selling 4.7 million shares at $15 to $17 each. It managed to sell 4 million at $14, raising $56 million. Editas and Intellia, the other two CRISPR firms that went public this year, each raised more than $100 million in their offerings. 

Not So CRISPy
Investors might have CRISPR fatigue; the third biotech IPO to focus on the gene-editing technique this year was the least lucrative
Source: Bloomberg

Why the decreased appetite? Familiarity breeds contempt, and investors have been burned already by these stocks. Intellia and Editas both saw their share prices climb to giddy heights after their debuts, but those gains are all gone now. Editas is down 11 percent since going public, and Intellia is down 30 percent. Experience with other hot biotech techniques has taught smart investors they are prone to periodic blowups and unexpected delays and can take years or decades to hit the market. 

None of these firms has made the crucial jump from animal to human testing yet. It's going to be a long wait for revenue. At this stage, it's hard to see why CRISPR Therapeutics will suddenly outperform in the midst of a down moment for biotech stocks and with its fellow gene editors in such disfavor. 

The Shine Is Off the CRISPR Apple
After promising starts, this year's two earlier CRISPR-focused IPOs have languished
Source: Bloomberg

Though biotechs with good trial results will always be fine, biotech IPOs can be sensitive to timing. Last year was a rather easier time to reap a big IPO payday with speculative companies. There were 52 biotech IPOs in 2015 that raised a total of more than $4 billion according to Bloomberg data. The majority of the deal flow and value came in the bubbly first 7 months of the year, as the Nasdaq Biotech Index rose to an all-time high.

In 2016, on the other hand, the NBI has been underwater from the very first trading day and is currently down 20 percent for the year. Little wonder there have been just 18 biotech IPOs worth a total of $867 million.

The realization that this year's U.S. presidential election isn't a death sentence for the industry, halfway decent third-quarter results, or a spot of M&A might be all it takes to perk the market up -- and CRISPR might really rue its timing then.

 

2016, Sad!
Happier days in the biotech stock market meant there were a whole lot more IPOs in 2014 and 2015
Source: Bloomberg

This will not make or break CRISPR Therapeutics. It raised plenty of cash when private, and a private placement alongside its IPO netted it extra dollars. A $500 million-plus valuation for a pre-clinical company is nothing to sneer at. 

But with a bit more patience, or a bit more haste, the company might have been able to get more out of going public. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Max Nisen in New York at mnisen@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net