Stealth BioTherapeutics, a US-based mitochondrial dysfunction drug developer that counts an affiliate of property development conglomerate as an investor, has floated in a $78m initial public offering.
The offering consisted of 6.5 million American Depositary Shares (ADSs), each of which represent 12 ordinary shares, priced at $12.00 each, at the bottom of its $12 to $14 range. The company listed on the Nasdaq Global Market on Friday and its shares closed at $11.90 yesterday.
Stealth Bio is developing therapies for rare genetic and age-related diseases caused by dysfunction in the body’s mitochondria, the parts of a cell that generate energy.
The company plans to use $25m of the proceeds to advance its lead candidate, elamipretide, through phase 3 clinical trials for a mitochondrial genetic disorder known as primary mitochondrial myopathy, which causes skeletal muscle weakness.
Another $8m will fund clinical development of elamipretide for Barth syndrome and Leber’s hereditary optic neuropathy, which cause heart muscle weakness and low white blood cells, and loss of vision respectively.
Stealth Bio will invest $8m in taking elamipretide through phase 2b trials for acute macular degeneration, which causes deterioration of vision, and $6m to move a second candidate, the neurodegenerative disease-focused SBT-272, to a phase 1 safety trial.
The company had emerged from stealth in June 2018 with a total of $100m in convertible note financing secured over two rounds, the first of which was led by Pivotal Beta, a venture capital fund owned by Nan Fung.
Morningside Venture Capital led the second round, having provided $82.4m of the total financing according to the IPO filing. BVCF Management, CMBC Capital Holdings, Kingdon Capital, Ocean Equity Partners, Sagamore Investments and funds associated with Atlantis Investment Management also contributed capital.
Morningside held a 98.3% share of Stealth Bio’s shares prior to the offering which was diluted to 64.4%, and had expressed interest in buying up to $50m of shares in the IPO. It is unclear whether the company’s other shareholders converted their debt into equity through the flotation.
Joint book-running managers Jefferies, Evercore Group and BMO Capital Markets and lead manager Nomura Securities International have a 30-day option to buy 975,000 more ADSs, which would lift the size of the IPO to $89.7m.
