Biotech Alector Drops as IPOs Restart After U.S. Shutdown

(Bloomberg) -- Alector Inc. fell in its trading debut after raising $176 million in the first U.S. initial public offering without a fixed share price since the government shutdown all but froze the market.

The biotechnology company ended its trading debut Thursday down 5.3 percent to $18, giving it a market value of $1.2 billion. On Wednesday, Alector sold 9.25 million shares at $19 each, the midpoint of the marketed range of $18 to $20.

The offering was the first to price in the U.S. since the 35-day shutdown that sidelined reviews by the U.S. Securities and Exchange Commission, according to data compiled by Bloomberg. All but one of the seven IPOs that priced after the shutdown began Dec. 22 were made possible by those companies setting fixed prices for their shares. That allowed the listings to proceed without additional SEC review.

Two other biotechnology or pharmaceutical companies have held IPOs this year and five more are set to price their shares by Feb. 15, when the temporary spending plan that’s kept the government open is set to expire. Combined, those listings are expected to raise a total of about $736 million, following 72 last year in the U.S. that raised $9.45 billion, the data shows.

The expected IPOs include two set to price Thursday. Gossamer Bio Inc., one of the companies that fixed the terms of its offer to avoid SEC delays, set its share price at $16 to raise $230 million. Harpoon Therapeutics Inc. is planning to price 5.4 million shares at $13 to $15 each, raising as much as $81 million at the top end of that range.

Alzheimer’s, Cancer

Alector is studying how to use the body’s immune system to tackle neurodegenerative disorders like Alzheimer’s disease. A similar approach has ushered in a new generation of cancer drugs, but has yet to succeed for brain and nervous system disorders.

Neuroscience, particularly Alzheimer’s research, is one of the riskiest areas of drug development. Despite the billions of dollars that pharmaceutical giants and upstarts have poured into the field, once-promising therapies have failed at the final stages of study and there’s still no treatment for the underlying cause of memory-loss disorder.

Alector, based in South San Francisco, is led by Arnon Rosenthal, a longtime former Genentech Inc. scientist, whose work has led to the development of several drugs. It board members include David Wehner, Facebook Inc.’s chief financial officer. As a private company, Alector raised money from investors including AbbVie Inc., Amgen Inc. and GV, the venture capital arm of Google parent Alphabet Inc.

The company intends to use the IPO proceeds to fund clinical trials, as well as develop new drugs.

The offering was led by banks including Morgan Stanley, Cowen Inc., Barclays Plc and Bank of America Corp. Alector is trading on the Nasdaq Global Select market under the symbol ALEC.

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