BIOMEDICAL

Austin's Aeglea BioTherapeutics makes $50 million on IPO

Posted April 7th, 2016

Austin officially has another publicly traded company. 

Aeglea BioTherapeutics Inc. on Thursday raised $50 million in an initial public offering, with an initial share price of $10. In its first day of trading on the Nasdaq exchange the stock closed at $9.77 a share.

The company, which develops drug therapies to fight cancer, offered 5 million shares at $10 a share, according to securities filings. The company said it expects proceeds from the offering -- before expenses -- of $46.5 million. 

That would be a smaller IPO than Aeglea previously was seeking, as previous securities filings called for a stock offering of up to $72 million with a pricing target of between $16 to $18 per share and 3.4 million shares. 

Aeglea's underwriters have a 30-day option to purchase an additional 750,000 shares. Underwriters for the stock offering are UBS Securities, BMO Capital Markets, Wells Fargo Securities and Needham and Company.

The shares are trading on the Nasdaq exchange on Thursday under the symbol "AGLE." 

Aeglea had to back away from its initial IPO plans because of supply and demand, said John Fitzgibbon, who runs IPOscoop.com. "They had to bring down the price to meet demand and they did find sufficient demand for 5 million shares at $10 to get it out to the door," Fitzgibbon said. "They got it done."

This is the first IPO for an Austin company in 2016 and only the seventh initial public offering on Wall Street so far this year. It has been a notably slow year for IPOs. Data compiled by a University of Florida professor shows that typically there are 19 public offerings a month, based on averages from the last 35 years. 

Companies have been cautious about launching IPOs in 2016 due to see-sawing market in the first few months of this year.  Fitzgibbon said the seven companies that launched IPOs so far this year have been from the "health care" sector, a category that includes pharmaceutical companies such as Aeglea.

While many of these companies have struggled initially, and dropped their IPO share price, Fitzgibbon noted that the other six companies had a return on their initial share price year-to-date of 45 percent.

Aeglea BioTherapeutics was founded in December 2013 by University of Texas professor George Georgiou and local venture capitalist David Lowe, who is now the company's CEO. 

The company develops drugs intended to exploit vulnerabilities in cancer cells, preventing these cells from gaining nourishment. 

Aeglea recorded a loss of $11.3 million in 2015, following losses of $10.3 million in 2014 and $1.9 million in 2013, and the company to date has "no recorded revenue from product sales, " according to securities filings. 

As of the end of last year, Aeglea had raised $54.7 million and in June entered into a $19.8 million grant agreement with the Cancer Prevention and Research Institute of Texas, which extends through May 31, 2017, according to filings. 

The company's shareholders include the UT Board of Regents, Lilly Ventures, Novartis Venture Fund, OrbiMed, Jennison Associates, Venrock, RA Capital Management, Rock Springs Capital and Ally Bridge Group.

In 2013, Aeglea entered into a licensing agreement with UT. The Board of Regents took its equity stake in the company through the Horizon Fund, which the board uses to invest in promising technologies developed by UT System researchers.

UT's stake could be a significant windfall if Aeglea receives regulatory approval for its cancer treatments, some of which are currently in the clinical trial phase.

This story has been updated throughout to reflect updated information about Aeglea's IPO and additional interviews.

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