Remember that record biotech IPO party in 2018? There was no ‘happily ever after’

Bioregnum Opinion Column by John Carroll

Back in the summer of 2018, Aptinyx $APTX was budding with high hopes. Its predecessor company, Naurex, had sold to Allergan so Brent Saunders and his crew could advance their “breakthrough” NMDA drug to what looked like a promising drug worth $560 million. Aptinyx would take the rest forward through the clinic.

But over the last five years, that drug and everything that went to Aptinyx went up in multiple blasts of bad data, destroyed by a litany of setbacks and failures that would wipe out all evidence of its former promise. Allergan later would sell to AbbVie, primarily for its Botox franchise, after taking some nasty pipeline hits.

The NMDA play ended in disaster and a $2.5 billion write-off.

On Friday, the Aptinyx board signed off for the last time, and the company quietly alerted the SEC of its intention to dissolve. Executive chairman and founder Norbert Riedel will take his severance and health benefits in his contract in a lump payment. Most of the remaining staff had already been laid off.

In many ways, Aptinyx represents a now common story in biotech. During its run, the company earned a $70 million round, with Bain leading the way. And they jumped straight into an IPO along with four other biotechs, at the time some kind of record as the biotech boom began to take hold and then run rampant during the pandemic.

Here’s what I wrote on June 21, 2018:

Usually biotech IPOs come one or maybe two at a time. Today, we have 5 simultaneously testing investors’ appetite for risky companies that will either reward them handsomely over the long haul or … well, not.

And look who they went public with:

Magenta $MGTA scored as well — $100 million. A few days ago — its staff largely laid off and departed, along with founding CEO Jason Gardner — it served up as a burned-out shell of a company that still could be used in a reverse merger for the next generation to come along.

Then there was Avrobio $AVRO, another $100 million IPO winner. Its market cap has shriveled to $30 million, with shares trading at 70 cents. CEO Geoff Mackay left for another startup last week.

Eidos Therapeutics was wrapped back into BridgeBio, which has had its own headaches to survive. And there was Xeris Pharmaceuticals $XERS — off 87% from 2018 — and Kezar Life Sciences $KZR, with shares off 85% since the IPO.

Two years later, biotechs would be elbowing each other as they lined up for IPOs. By 2021, biotechs would form with an S-1 on the shelf.

But every boom comes. And every boom goes.

Out of all this carnage, you’ll find the outline of the next wave taking shape. It will be a long, slow and painful return, but eventually, public markets will warm again. We may well be seeing the beginnings of that rebirth right now as M&A deals swell and positive data win major rewards on Wall Street. We’ve even seen a couple of successful IPOs, which is more than we saw in 2009.

But Aptinyx and the rest of the biotech failures should be seen off with some recognition of what the backers and researchers once hoped and hyped. Failure contains lessons as valuable as success in biotech. And you won’t get that from any midnight burial and brief obituary.

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