This Week's First IPO: Global Blood Therapeutics Developing Drugs For Diseases Affecting Few

Global Blood Therapeutics GBT priced its 6 million share IPO above its expected $16 to $18 range at $20 per share Tuesday night. The company specializes in development and treatment of blood disorders with serious needs previously unmet.

Shares opened for trade in the $34 handle on Wednesday morning.

Global Blood Therapeutics is developing its primary candidate, GBT440, an oral drug to treat sickle cell disorders. It is currently in a double-blind trial with healthy and sick patients. The company is also working on developing drugs to treat hypoxemic pulmonary disorders like pulmonary fibrosis and hereditary angioedema.

GBT sees its market opportunity in working with the estimated 100,000 effected individuals born annually with sickle cell disease (SCD). SCD sufferers typically experience a lifespan reduction of 25 to 30 years. Assuming a 50-year lifespan, a United States-based study estimates costs to treat SCD to be nearly $8 million.

Management consists of a group of people with experience in 18 different drug approvals, as well as practical laboratory experience in drug discovery, development and commercialization.

Financials

Like most biopharmaceutical companies with a single focus drug still in development, GBT operates with no revenues and losses in 2014 of nearly $21 million. At its current cash-burn rate and with zero revenues, the company can expect to end 2015 with nearly a $28 million loss.

Balance sheet cash of $46 million in 2014 will be joined by about $110 million after the offering. The company intends to use roughly $80 million to fund development, clinical trials, and required filings of its SCD drug. The remainder will be used as working capital and to fund any new research or drug developments.

Underwriting And Trading Info

GBT’s offering is lead by Morgan Stanley and Goldman Sachs. Of the 15 previous transaction lead by Morgan Stanley, eight trade below its first day close. The three best performing offerings are Tesaro Inc TSRO, Chimerix Inc CMRX and Ultragenyx Pharmaceutical RARE. The three top losers are AVEO Pharmaceuticals AVEO, Pacific Biosciences of California PACB and Akebia Therapeutics AKBA.