COVID-19 Drug Developer Joins IPO Pipeline In Packed Week

By Tom Zanki
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Law360 (October 26, 2020, 9:13 PM EDT) -- COVID-19-focused biotechnology firm Atea Pharmaceuticals Inc. set a price range Monday for an estimated $253 million initial public offering, one of two Latham-led drug developers to join a packed lineup of 15 operating companies planning to go public this week.

Boston-based Atea, represented by Latham & Watkins LLP, told regulators on Monday it plans to offer 11 million shares priced between $22 and $24, raising $253 million at midpoint. Watertown, Massachusetts-based SQZ Biotechnologies Company joined Atea, outlining plans to offer 4.4 million shares priced between $16 and $18. SQZ, also represented by Latham, would raise $75 million at midpoint.

Both offerings are set to price this week, according to an IPO calendar tracked by research firm Renaissance Capital.

Atea and SQZ join a robust schedule that now totals 15 operating companies set to go public in the final week before Election Day, led by an estimated $2.2 billion IPO by Chinese fintech company Lufax Holding Ltd. The tally does not include blank-check companies, which are shell entities that raise money through IPOs in order to fund acquisitions, but several blank-check companies have also filed IPO plans in recent weeks and can price their offerings quickly.

Atea is developing therapies to treat life-threatening infections. Its lead product, AT-527, is an orally administered drug that would treat patients with COVID-19. Atea is also developing drugs to treat hepatitis C and dengue, a mosquito-borne viral infection.

The company said it plans to spend most IPO proceeds, plus funding from a recent convertible bond sale and money Atea received through a collaboration with Swiss health care giant Roche, on the development of AT-527. Atea acknowledged the risks of its potential COVID-19 therapy, saying that AT-527 is in its "early stages" and may not be successful. Atea added that it has taken resources that could be used to develop its hepatitis C drug in favor of its COVID-19 therapy.

"We believe that there is an urgent unmet need for effective COVID-19 treatments," Atea said in a U.S. Securities and Exchange Commission filing. "Accordingly, if the data from our ongoing and planned clinical trials of AT-527 in COVID-19 patients are positive, we may pursue certain expedited development, review and approval programs offered by the U.S. Food and Drug Administration, or FDA, to sponsors of drugs designed to treat serious diseases and conditions."

Like many early-stage biotechnology companies, Atea has yet to turn a profit or generate recurring revenue, as its products are still under development. Atea is backed by several private equity and venture capital investors, including Bain Capital Life Sciences.

SQZ is developing cell therapies to treat cancer and infectious diseases. The company said most IPO proceeds and existing cash would fund a lead product that would treat forms of human papillomavirus. Its lead investor is health care- and technology-focused Polaris Partners.

Atea and SQZ are part of a busy slate of IPO candidates that includes pool supplies retailer Leslie's Inc., which plans to raise about $600 million, and mobile-based auto insurer Root Inc., which increased the size of its IPO on Monday and now expects to raise about $578 million.

Chinese personal financial services platform Lufax is moving ahead with this week's largest offering. Lufax plans to offer 175 million shares priced between $11.50 and $13.50, raising $2.2 billion at midpoint. The company announced its pricing range last week.

Atea is represented by a Latham team led by partners Peter Handrinos and Wesley Holmes. Handrinos and Holmes are also steering SQZ's IPO.

A Davis Polk & Wardwell LLP team led by Richard Truesdell and Yasin Keshvargar is advising Atea's underwriters.

A Goodwin Procter LLP team led by partners Mitch Bloom and Seo Salimi is advising SQZ's underwriters.

--Editing by Alanna Weissman.

For a reprint of this article, please contact reprints@law360.com.

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