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BRIEF
Atea, riding interest in COVID-19 drugs, pulls off one of 2020's top biotech IPOs

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Ben Fidler@BentheFidler
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Oct. 30, 2020
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Dive Brief:

• Boston biotech Atea Pharmaceuticals, a developer of small molecule drugs for infectious diseases, has raised $300 million in an initial public offering, selling 12.5 million shares at $24 apiece.
• The new funding will help Atea advance an antiviral to treat or potentially prevent COVID-19, as well as a portfolio of other medicines for viruses like Dengue and respiratory syncytial virus. The IPO comes seven days after Roche paid the firm $350 millionfor partial rights to the COVID-19 antiviral AT-527, which is currently in mid-stage testing and could advance to multiple Phase 3 trials next year.
• Atea's IPO is the fourth largest U.S. biotech stock offering of 2020 and the eighth biggest since the start of 2018, according to a database compiled by Biopharma Dive. Despite an initial slowdown at the beginning of the pandemic, biotech company IPOs are on a record-setting pace this year, reflecting excitement surrounding the industry's role in developing coronavirus treatments and vaccines.

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Dive Insight:

Infectious disease drugs haven't generated nearly the type of interest from IPO investors in recent years as cancer drugs. Of the ten largest offerings in each of the last three years, for example, 14 of those 30 biotechs had an experimental or marketed cancer medicine as their lead program. Just one biotech — AlloVir, which raised $276 million in July — had an infectious disease drug at the forefront of its pipeline, according to Biopharma Dive's IPO database.
The coronavirus pandemic, however, increased interest in both vaccines and infectious disease drugs as the industry scrambled to respond. Shares of Moderna and BioNTech, for instance, have surged to all-time highs because of their progress with experimental coronavirus vaccines. CureVac, another developer of a coronavirus shot, has the second highest market value of any biotech to go public in the U.S. this year. Newcomers AlloVir and Vaxcyte, meanwhile, are among the year's better performers, climbing at least 54% from their offering price as of Thursday's market close.
Atea, then, appears to have gone public at the right time. Formed in 2014, the company was originally developing AT-527 for hepatitis C infections. In May, it was cleared to begin testing the drug, an oral small molecule that interferes with the RNA of several viruses, against SARS-CoV-2.
Atea has since started a Phase 2 trial of 190 patients with moderate disease and one or more risk factors for poor outcomes, with results expected next year.
The pivot to coronavirus research has been lucrative for Atea. Since then, the biotech has raised $215 million in a private funding round, added $350 million in cash through the partnership with Roche and now another $300 million through its IPO.
Atea claims its antiviral is easy to manufacture and less burdensome to administer earlier in a patient's disease course, when stopping the virus from spreading might help prevent the progression of COVID-19. Gilead's approved COVID-19 drug Veklury, by comparison, must be infused over several days, making it more difficult to administer when it might be most effective.
Other, larger companies are also seeking to improve on Veklury. Merck & Co. has an antiviral pill it licensed from Ridgeback Therapeutics in Phase 2 testing. And Pfizer is advancing an intravenously administered antiviral drug.
Engineered antibody drugs from Regeneron, Eli Lilly and others could also play a role in treating COVID-19 patients before they need to be hospitalized.
The Roche partnership, announced just a week before Atea's IPO, has given the company the backing to run a broad development program. Positive results in the ongoing mid-stage trial could lead to two Phase 3 tests in non-hospitalized patients and those newly exposed to infection.
In addition to the $350 million upfront, Roche could pay Atea another $650 million more under the agreement, with $330 million tied to regulatory development milestones. In return, Roche secured international rights to AT-527, and will help manufacture and distribute the drug overseas.
Cell therapy developer SQZ Biotechnologies also went public on Friday, raising $71 million. Sixty three biotechs — which Biopharma Dive defines as companies developing human medicines — have raised more than $50 million through a U.S. IPO this year.