Galecto, the US-based cancer and fibrosis drug developer backed by pharmaceutical firms Novo, Bristol Myers-Squibb (BMS) and Merck Group, raised $85m when it floated on the Nasdaq Global Market yesterday.
The company priced almost 5.67 million shares at $15 each, in the middle of the $14 to $16 range it had set for the initial public offering. The share price values it at approximately $368m.
Founded in 2011, Galecto is developing treatments for fibrosis, a condition that causes scarring on connective tissue, and cancer. It had about $85m in reserve pre-IPO and will put that and the proceeds from the offering towards clinical development of its drug pipeline.
The company’s approach is based on research by Ulf Nilsson and Hakon Leffler at Lund University, Sweden, and University of Edinburgh professor Tariq Sethi. It was spun out with help from commercialisation firm Forskarpatent i Syd.
About $95m will support the progression of Galecto’s lead product candidate, GB0139, through a phase 3 clinical trial in a fibrotic lung disease known as idiopathic pulmonary fibrosis.
Additional proceeds will fund phase 2a trials for a second candidate, GB1211, in both cancer and a liver disease called non-alcoholic steatohepatitis, in addition to a phase 2 trial for a third, GB2064, in a type of bone marrow cancer known as myelofibrosis.
Merck investment vehicle M Ventures, Novo subsidiary Novo Seeds, Seed Capital and Sunstone Capital had provided about $5.4m for the company as of 2014.
Ysios Capital and OrbiMed co-led a $90m series C round for Galecto in late 2018 that included BMS, Novo Seeds, M Ventures, HBM Healthcare Investments, Maverick Ventures, Seventure Partners, Sunstone Capital and OrbiMed Israel.
All the series D participants bar M Ventures returned for a $64m round last month that was co-led by Soleus Capital and Eir Ventures and also backed by Cormorant Asset Management, Janus Henderson Investors, Canica, Hadean Ventures, Sphera and Asymmetry Capital Management.
Novo’s 11.4% stake in the company was diluted to 8.8% in the offering while M Ventures’ was cut from 6.5% to 5%, and BMS’s from 6.2% to 4.8%.
OrbiMed remains Galecto’s largest shareholder, with a 13.6% stake post-IPO, and its other notable investors are Sunstone (6%), HBM Healthcare Investments and Cormorant Asset Management (4.7% each), Ysios Capital (4,6%) and Bay City Capital (4.2%).
Joint book-running managers BofA Securities, SVB Leerink and Credit Suisse and lead manager Kempen & Co have the 30-day option to buy up to 850,000 additional shares, potentially lifting the size of the offering to $97.8m.
