Septerna raises $288M in IPO

Septerna, a company specializing in the development of drugs targeting a widespread family of proteins, has successfully launched a $288 million initial public offering (IPO). This event highlights continued investor confidence in biotechnology firms that have advanced to the clinical testing phase. The company sold 16 million shares at $18 each, surpassing its initial price range of $15 to $17 per share as outlined in a securities filing earlier in the week. Additionally, Septerna increased the number of shares available just before finalizing the pricing. The shares, trading under the ticker SEPN, are set to debut on the Nasdaq stock exchange.

Before this IPO, Septerna had accumulated over $200 million through private funding rounds. Some of its early financial supporters included Third Rock Ventures and Samsara BioCapital, with RA Capital Management spearheading a Series B funding round in 2023.

Septerna's research centers around G protein-coupled receptors (GPCRs), which play crucial roles in various biological functions such as energy metabolism and immune responses. Due to their significant role, GPCRs are common targets for drug development; approximately one-third of all approved medications focus on these receptors. However, the progress in this area had stalled until Septerna's inception in 2021, which aimed to address the challenges researchers faced in isolating and designing drugs for GPCRs.

Jeff Finer, the CEO of Septerna, noted in an early 2023 interview with BioPharma Dive that most successes have come from a limited number of GPCRs, although there are hundreds more that could provide therapeutic benefits.

Septerna's leading drug candidate, SEP-786, is aimed at a GPCR associated with hypoparathyroidism and entered human trials last month. The company projects that data from these trials will be available by mid-2025. Hypoparathyroidism treatments currently involve daily injections and high-dose calcium supplements. Septerna believes that their small molecule drug can help patients regulate their calcium and phosphate levels, deficiencies of which can lead to serious health issues like seizures and kidney failure.

In its securities filing, Septerna disclosed plans to allocate about $117 million from the IPO proceeds to advance SEP-786. An additional $37 million will be directed towards the development of another drug, SEP-631, intended for chronic spontaneous urticaria and other mast cell-related conditions.

The last biotech firm focused on GPCRs to go public was Structure Therapeutics, which raised $161 million in February 2023. Structure's share price has fluctuated with updates about its obesity drug in development. Other companies in this niche, such as Escient Pharmaceuticals and Tectonic Therapeutic, have also secured significant funding, although not at the same scale as Septerna or Structure. Escient was acquired by Incyte in April, while Tectonic went public through a reverse merger in June.

The months of September and October have seen a surge in biotech IPOs, with eight companies completing offerings on Nasdaq. Bicara Therapeutics led this group with $315 million in proceeds, making it the largest offering. This period marks the busiest two months for biotech IPOs since the beginning of the year, according to data from BioPharma Dive.

Despite the reduced number of opportunities compared to the peak years of 2020 and 2021, investors still have substantial capital to invest. Jordan Saxe, the senior managing director of listing services at Nasdaq, noted that every IPO is evaluated not only for its clinical and commercial potential but also for its merger and acquisition prospects.

Septerna's IPO is the 23rd biotech IPO of the year, underscoring the sector's resilience and the ongoing interest from investors in groundbreaking medical research and development.