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Physicist and His Financier Brother Net $5 Billion Biotech IPO

Physicist and His Financier Brother Net $5 Billion Biotech IPO

(Bloomberg) -- Two brothers banking on a novel approach to diagnosing disease are behind the splashiest stock-market debut by a biotechnology company this year.

Adaptive Biotechnologies Corp. saw its shares more than double in value in their first day of trading Thursday on the Nasdaq Stock Market, after pricing at $20 in their initial public offering. The surge left Seattle-based Adaptive with a valuation of roughly $4.9 billion. The launch is the latest in a recent run of successful market premieres for innovative health-care companies.

The company has a grand vision of building a map of the immune system that would allow doctors to diagnose virtually any disease -- from Lyme to multiple sclerosis to cancer, ideally in the earliest stages -- through a simple blood draw.

Adaptive is the brainchild of Harlan Robins, 46, a medical researcher who holds a doctorate in theoretical physics from the University of California, Berkeley, and Chad Robins, 45, a former hedge-fund trader with an MBA from the Wharton School of Business.

After earning his Ph.D., Harlan had turned down opportunities to make millions as a quant on Wall Street. By 2009, he was working as a researcher at Fred Hutchinson Cancer Research Center in Seattle, when he called Chad with the idea of starting a company. Chad was focused on real estate, not health care. He knew little about his brother’s research, but he said yes.

A decade later, the Robins brothers are enjoying a windfall: Together, they own almost 7% of Adaptive, a stake worth roughly $337 million after Thursday’s pop. Chad, who is the company’s chief executive officer, holds a larger stake than Harlan.

Physicist and His Financier Brother Net $5 Billion Biotech IPO

Cell Signals

When a patient is in the early stages of disease, markers of the illness called antigens appear on the surface of the pathogen. T-cells, or white blood cells, detect those signals and organize a response. The signatures on the cells’ surface can reveal whether a patient’s body is fighting off Lyme or ovarian cancer, for example.

Using recent advances in genetic sequencing and increased computational power, Adaptive is hoping to be able to identify those signals in order to better diagnose many diseases.

Adaptive is hoping to build a database of the immune system that would allow doctors to diagnose a whole set of disorders with one test. Chad Robins said in an interview that he envisions physicians using it in much the same way investment bankers use Excel.

Building such a database requires mathematical know-how, huge computational wherewithal and cash. While Harlan focused on building the company’s research capabilities, Chad criss-crossed the country raising money from friends, family and institutional investors.

Adaptive is further along than many biotechnology companies that have recently sold shares to public investors. It already has two products on the market, unlike many peers that are often years away from selling anything when they IPO. While still private, Adaptive closed deals with Microsoft Corp. and cancer giant Genentech.

Robust Markets

Adaptive benefited from robust capital markets that have sent valuations of young companies soaring.

The company raised $300 million through its listing, a figure that might have been an industry record several years ago but is becoming routine. Bridgebio Pharma Inc., which made its debut on Thursday alongside Adaptive, is now valued at about $3.3 billion after raising $348.5 million in its initial offering.

Meanwhile, investors from Third Rock Ventures to Bain Capital to Blackstone Group LP have raised ever-larger funds to pour into the industry. Bulls argue that the science behind upstart biotechs is more advanced than ever and that tests like Adaptive’s are years, not decades, from reality. Bears say immature and unproven companies are raising too much money too early in their development.

Either way, the capital markets remain open for now. For its part, Adaptive says it is focused on the science.

“I see the IPO as just one more step in the process,” Chad said. “We have so much more to accomplish.”

To contact the reporter on this story: Rebecca Spalding in Boston at rspalding@bloomberg.net

To contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, Timothy Annett, Mark Schoifet

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