Evelo Biosciences, a US-based gut-body therapeutics developer backed by internet technology conglomerate Alphabet and pharmaceutical firms Celgene and Mayo Clinic, went public on Wednesday in an $85m initial public offering.
The company issued just over 5.3 million shares on the Nasdaq Global Select Market priced at $16 each, the middle of the $15 to $17 range it set late last month, giving it a market capitalisation of about $510m.
Evelo is developing treatments for inflammatory diseases and cancer that will target the body’s gut, which links to organs and tissues, playing an important role in its immune and biological systems.
The company plans to invest between $45m and $50m of the IPO proceeds and its cash on hand on proof of concept clinical trials for its inflammatory disease drug candidates, while up to $30m will go to similar trials for its oncology program, and $45m to general preclinical activities.
The offering follows some $167m in funding, according to press releases and regulatory filings, including $50.7m in a July 2017 series B round featuring Celgene, Mayo Clinic and GV, the Alphabet subsidiary formerly known as Google Ventures.
Flagship Pioneering, the company builder that incubated Evelo before providing $35m in series A funding in 2015, led the series B round, which included Alexandria Venture Investments, part of real estate investment trust Alexandria Real Estate Equities. Evelo added $47.5m in February 2018.
Flagship Pioneering retains a majority stake in Evelo, despite its 67.6% stake being diluted to 56.3% in the IPO. Financial services and investment group Fidelity Management and Research, which also invested at series A stage, owned a 7.1% stake that was cut to 6%.
Morgan Stanley, Cowen and BMO Capital Markets are the bookrunning managers for the IPO while JMP Securities is lead manager. If they take up the option to buy almost 800,000 more shares over a 30-day period, its size will increase to approximately $97.8m.