(News Bulletin 247) – Already listed in Paris, Abivax made its debut on the Nasdaq at the end of last week to raise the funds necessary for the development of its potential treatment for ulcerative colitis, a chronic inflammation of the intestinal mucosa. The stock fell 28% on Friday on its first day of trading.

The weather is gloomy for IPOs, even for the most promising biotechs. Abivax, specializing in chronic inflammatory diseases, had a difficult stock market debut for its IPO on the Nasdaq last Friday.

The French company thus saw its action fall by 28% on Friday compared to its price of 11.60 dollars which it had set for its IPO on the Nasdaq. It was carried out as part of a dual listing, Abivax having been listed on the Paris Stock Exchange since 2015.

The price put forward by Abivax was already at the bottom of the indicative range of $11.60 to $13 that it had communicated a few days earlier. The market context is not the most favorable for the French company, while the prices of the latest entrants on the American stock market are below their IPO price. Birkenstock, the German sandal specialist founded in 1774, plunged more than 12% for its first stock market debut on October 10.

“We knew that this IPO was going to be difficult, with a lot of nervousness on the markets,” said Marc de Garidel, general manager of Abivax, on Monday October 23, who was a guest on the Good Morning Business show on BFM Business.

In detail, Abivax issued more than 20.3 million new shares as part of this dual listing in New York associated with a private placement in Europe, of which 18.7 million were subscribed in the form of American Depositary Shares or ADS. These ADS (“American depositary shares”) are certificates of deposit which allow shareholders based in the United States to invest in foreign companies, such as Abivax which is already listed on the Paris Stock Exchange.

Despite this adverse context for Abivax, the French biotech managed to raise $235.8 million, based on this price of $11.60. This amount therefore represents just over 220 million euros, which will support Abivax in the development of therapeutic treatments with a view to modulating the immune response in patients suffering from chronic inflammatory diseases.

A historic fundraising for a French biotech

For Abivax, this IPO marks an important milestone in its history. “The good news is that Abivax is one of the rare companies to have been able to raise money on the Nasdaq. We achieved the largest fundraising by going to French biotechs,” says Marc de Garidel. .

A large part of the funds raised, i.e. 160 million euros, will be dedicated to financing its advanced clinical trials for a chronic inflammatory disease of the intestinal mucosa, ulcerative colitis. This disease, which affects the rectum and often the colon, affects a million people in the United States and as many in Europe. “This disease is very debilitating,” recalls Marc de Garidel.

The group is developing the molecule obefazimod (ABX464) for its experimental drug which aims to treat this inflammatory disease. “The molecule that we are developing stimulates another that regulates the immune system, particularly when you have too much inflammation in the body. In the case of ulcerative colitis, as in Crohn’s disease, the intestine becomes inflamed and causes very serious inconvenience. And in the most extreme cases, we can even remove your intestine,” adds the manager of Abivax.

Last September, the company said it had cash of 118 million euros, a figure which should enable it to finance its operations until the second quarter of 2024. “Recall that the company has already and already needs a significant amount still to be raised to successfully complete its phase III (i.e. the last stage of clinical trials before potential marketing, Editor’s note) in progress in ulcerative colitis, fact, the addition of significant new costs for this strategy oriented towards the United States should generate cash-outs higher than anticipated until now”, explained Invest Securities in reaction to the roadmap presented by Abivax last September.

“This molecule (obefazimod) targets intestinal diseases but next year, we may announce other potential indications,” adds Marc de Garidel. “Blockbuster” potential, obefazimod could indeed generate revenues of more than 1 billion euros in very varied indications, Mohamed Kaabouni, analyst at the Portzamparc research office, explained to News Bulletin 247 last year.

Before this operation in the United States, Abivax had already strengthened its cash flow at the start of the year, with a fundraising of 130 million euros from American and European investors. Then, in May, the company entered into two structured financing arrangements for an amount of 150 million euros, notably via bonds convertible into shares with share subscription warrants (OCABSA).

The American dream for French biotechs

Before Abivax, more than ten French companies launched on the stock market across the Atlantic. And for the most part, in the biotechnology sector like DBV Technologies, which wanted to seek additional funds to finance the continued development of its peanut allergy treatment, Viaskin Peanut. Or Cellectis, the specialist in genome editing tools for the treatment of serious diseases which entered the Nasdaq in 2015, eight years after its introduction in Paris.

“There is a risk appetite which is stronger in the United States and a lot of skills in the medical field. There are specialized investment funds which are interested in Abivax’s research,” explained the Abivax manager. .

The Nasdaq is in fact the preferred home of these companies at the forefront of innovation in need of visibility and investors able to understand their economic model. This is particularly the case for biotechnology companies which can access greater financing thanks to a more receptive ecosystem on the other side of the Atlantic.

“These companies come to find a larger investor base, who can better understand their business, with more comparable securities, and who are often willing to pay a higher valuation,” explained Ben Laidler, global market strategist. at Etoro.

This financing lever has already been activated by Genfit, Cellectis, Biophytis, Innate Pharma and DBV Technologies. But success is not there for most of these companies, as we mentioned in a previous article devoted to the stock market journey of these rare companies having tried the experience of listing in the United States.