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AnaptysBio’s IPO Success Raises Question: Who Is Next?

One initial public offering may not sound like much, but the January debut of San Diego biotech AnaptysBio Inc. on the stock market may be providing reassurance to others in the region considering an IPO this year.

The company raised $75 million in an upsized IPO Jan. 26, selling five million shares at $15 apiece.

Shares began trading at $16. By the end of March, shares were trading above $27.

“It’s been one of the highest performers,” said Tim Holl, San Diego audit partner with Ernst & Young LLP.

A Renaissance Capital report had the early-stage biotech atop its list of best performing U.S. IPOs in the first quarter of the year.

The San Diego life sciences deal was one of four IPOs in Southern California in the first quarter of the year; six companies on the West Coast went public in the first three months of 2017, according to EY’s data, which tracked IPOs through the end of March.

(San Diego-based Tocagen Inc., a clinical-stage gene therapy company, looks like it will be the region’s second IPO this year. The company plans to raise just shy of $80 million by selling 7.25 million shares for $10 to $12 per share, according to an April 3 filing with the Securities and Exchange Commission.)

2017 looking up

In the first quarter of 2016, only one West Coast-based company went public, according to EY data. So far, 2017 is shaping up more like the first quarter of 2015, when seven companies in the western portion of the U.S. went public.

Nationwide, a total of 24 U.S. companies raised $10.8 billion, the EY data show. That was more than 1,000 percent higher than the amount raised in the same quarter in the prior year, and 200 percent more deal volume. But nearly a third of the funds raised were through one public offering, the $3.4 billion mega-IPO of Venice-based tech firm Snap Inc., best known for its temporary photo messages.

Deal volume and capital raised during the quarter was the highest since the second quarter of 2015, when 72 companies raised $14.3 billion, EY said.

2016 predictions on the mark

As 2016 drew to a close, predictions for the IPO market in the upcoming year were relatively rosy.

Activity in the first quarter didn’t disappoint, Holl said.

“It provides a nice runway,” he said. “There is appetite out there for some of these larger deals.”

Holl said he expects San Diego will see three to four additional life sciences IPOs this year.

Some investors’ optimism has been tempered, however, with the uncertainty engendered by the new administration over its policies pertaining to life sciences, he said.

“It’s still to be determined as to how that’s going to play out,” he said. Overall, “we’re expecting 2017 to be better than 2016, but it remains to be determined if we’re going to get back to what we saw in 2015,” Holl said

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