Zogenix to submit anti-seizure drug for approval after clinical trial confirms benefit

JULY 12, 2018

Wall Street still loves early-stage biotech

Coming into this week, five preclinical biotech companies had gone public in 2018 after just one managed that feat the year before. And the sixth, Rubius Therapeutics, looked poised to test investors’ willingness to accept risk, seeking a $1.8 billion valuation even though it hasn't yet started a clinical trial.

The result: Rubius managed to price above expectations and secure a $2 billion valuation in its IPO yesterday, raising about $241 million in the process. The company’s share price rose as much as 35 percent in morning trading, as investors bought into Rubius’s promise to transform red blood cells into treatments for a host of diseases.

That means it's worth roughly as much as Zogenix, a company that just posted positive Phase 3 data and looks to be on the path to FDA approval.

Rubius’s next big milestone will come early next year, when it will ask the FDA’s permission to test its lead product in humans. That’s usually a box-checking endeavor in biotech, but companies working in scantily charted scientific territories sometimes run into surprises. Translate Bio, another recent IPO success, hit an FDA speed bump on the path to the clinic with its mRNA-based treatment. And Solid Biosciences, which went public last year, had to pause the first human trial of its gene therapy at the FDA’s request.

The thing about preclinical biotech companies is that the earlier you are in the drug development process, the riskier things get. And, depending on the FDA, Rubius’s IPO investors may learn that lesson next year.