COVID-19 Drugmaker Leads 2 Latham-Led Cos.' $373M IPOs

By Sierra Jackson
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Law360 (October 30, 2020, 8:43 PM EDT) -- Shares for a Latham-led biotechnology company that's developing a coronavirus treatment soared Friday as it and another Lathem-led life science business kicked off trading Friday for initial public offerings that raised a total $373 million to fund clinical trials.

Boston-based Atea Pharmaceuticals led the pair of offerings by landing an upsized $300 million when its 12.5 million shares debuted on Nasdaq under the ticker symbol AVIR for $24 each, according to a press release. The life science company offered 1.5 million more shares than expected and priced the shares at the high end of the price range between $22 and $24 it set in its regulatory filings.

The share price ballooned to $30.34, or more than 26% above the offering price, when the market closed Friday.

If Davis Polk & Wardwell LLP-led underwriters J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Evercore Group LLC and William Blair & Co. LLC. opt to buy an additional nearly 1.8 million shares within 30 days, the proceeds could rise to at least $345 million.

Atea told the U.S. Securities and Exchange Commission that it's currently developing antiviral drugs that can be taken orally to target infections including the coronavirus, hepatitis C virus, dengue and respiratory syncytial virus.

"We believe our team's expertise from decades of developing innovative antiviral treatments uniquely positions us to advance medicines that have the potential to cure some of the world's most severe viral diseases by inhibiting the enzymes central to viral replication," the company told the SEC.

Its pipeline is anchored by its coronavirus treatment, AT-527, which the company said is currently being tested one about 190 adults with mild cases of the virus in Phase 2 trials. The first patient received the treatment in September and the biotechnology company said it plans to have results from the trial by the first half of 2021. After that, the treatment will enter Phase 3 trials.

Pharmaceutical giant Roche paid Atea $350 million upfront in October to obtain the exclusive right to develop and license the coronavirus treatment outside of the U.S., except for certain hepatitis C virus uses, the SEC filings show.

Atea added that $300 million from its IPO proceeds have been earmarked to fund trials for its coronavirus treatment, while the rest of the money will support clinical trials and the development of its other treatments as well as general corporate activities, according to the registration statement.

Atea is backed by investment companies including Morningside Investments Ltd., JPM Partners LLC and affiliates of Cormorant Private Healthcare Fund I LP and Bain Capital's life sciences, according to SEC filings.

Area's IPO follows that of German biopharmaceutical company CureVac, which is working on a coronavirus vaccine. CureVac raised at least $213 million through an August IPO.

In the smaller biotechnology offering Friday, SQZ Biotechnologies Co. raised $71 million by selling about 4.4 million shares on the New York Stock Exchange under the symbol SQZ for $16 each, according to a news release. That price was the low end of the range between $16 and $18 it outlined in its SEC filings.

SQZ's share price dipped Friday to close at $13.25, or more than 17% below the offering price.

But if underwriters BofA Securities Inc., Evercore Group LLC, Stifel Nicolaus & Co. Inc., and BTIG LL — advised by Goodwin Procter LLP — choose to buy about 661,700 more shares within 30 days, the proceeds could rise to at least nearly $81.6 million.

Founded in 2013, the Watertown, Massachusetts-headquartered company said it would use the majority of the money to fund ongoing clinical tries and initiate new trials for its cell therapies that boost the immune systems' ability to destroy the cancer-causing, sexually-transmitted human papillomavirus, according to the SEC filings.

SQZ CEO Armon Sharei told Law360 in an interview Friday that the company was excited to be able to raise the money, as he said its ongoing trials for cancer patients have shown that cell therapies can be manufactured faster, are more cost effective, and result in fewer side effects and shorter healing periods for patients than traditional treatments.

"This funding enables us to continue to work towards the future where you can have these cell therapies be accessible to many different patients and drive potentially transformative changes in these disease areas that have been so hard to address with classical mechanisms like small molecules and biologics," Sharei said.

SQZ's IPO comes after the company raised $65 million in a May funding round that saw participation from investors including Singapore's state-owned investment company Temasek Holdings Pte. Ltd., GV, Illumina Ventures, Invus, JDRF T1D Fund, NanoDimension and Polaris Partners.

Both offerings are scheduled to close Nov. 3, according to separate press releases.

Representatives for Atea and SQZ did not immediately respond to requests for comment.

The Latham & Watkins LLP teams advising Atea ad SQZ are led by partners Peter N. Handrinos and Wesley C. Holmes.

Atea's underwriters are advised by a Davis Polk team including capital market partners Richard D. Truesdell Jr. and Yasin Keshvargar and associates Angela Park and Ariel Rivera; advising on intellectual property by partner David R. Bauer and associates Tilak Koilvaram and Jessica Brodman; advising on tax matters from partner Mario J. Verdolini and associate Shay Moyal; and advising on FINRA matters by counsel Marcie A. Goldstein. 

SQZ's underwriters are advised by a Goodwin team led by partners Mitchell S. Bloom and Seo Salimi.

--Editing by Amy Rowe.

Update: This story has been updated with additional counsel information. 

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