One of the first major biotech deals of the new year is offering investors a big bet on diabetes and obesity treatments.
Drug developer Structure Therapeutics has set terms for a deal that aims to comfortably clear the $100 million mark. On Monday, January 30, Structure Therapeutics announced it would offer 8.95 million American depositary shares (ADS) ranging from $13 to $15 per unit through its initial public offering (IPO).
Assuming a $14 midrange price point, Structure Therapeutics expects to raise around $112 million. That figure could climb higher to almost $130 million if underwriters exercise an option to purchase an extra 1.34 million ADS. Bookrunners for the deal include Jefferies, SVB Leerink, Guggenheim Securities, and BMO Capital Markets.
Structure Therapeutics will hit the markets just as investors absorb the 0.25 percentage point rate hike announced by the Federal Reserve on Wednesday. The deal is due to price on Thursday evening, February 2, and begin swapping hands on the NASDAQ under the ticker “GPCR” on Friday, February 3.
The company is developing oral medicines for chronic diseases and is currently focused on pulmonary, metabolic, and cardiovascular kinds. The company's flagship drug candidate targets G-protein receptors (or “GPCRs,” hence the aptly-named ticker). The company recently began Phase 1b trials for its flagship drug candidate – GSBR-1290 – which aims to treat Type 2 diabetes and obesity. Structure Therapeutics plans to move into a Phase 2a proof-of-concept study later this year.
Its CEO, Raymond Stevens, Ph.D., has a multi-decade career pioneering GPCR research and solved the first structure of a human GPCR in 2007, according to its prospectus. Raymond went on to found Structure Therapeutics with drug design firm Schrödinger in 2016. The company is incorporated in the Cayman Islands and has office addresses in San Francisco and Shanghai.
A Fattening ‘Diabesity' Market
Diabetes and obesity are already health epidemics in their own right, and each look set only to get bigger.
The global market for type 2 diabetes treatments in 2021 reached $30 billion and is expected to double to $60 billion by the decade's end. North America is the largest market worldwide and is experiencing sustained growth due to the prevalence of diabetes in the region as well as several favorable government initiatives and reimbursement plans, according to Canada-based Precedence Research.
Yet obesity's button-popping growth could be even more staggering. Valued at $2.4 billion as a category last year, obesity treatment is tipped by Morgan Stanley to become a top-12 global therapy soon, ballooning to $54 billion by 2030.
“We believe the treatment of obesity is on the cusp of moving into mainstream primary care management,” said Morgan Stanley equity analyst Mark Purcell.
“The clear precedent for investors is treatment for high blood pressure, which went from a nascent category in the 1980s to a $30 billion market in the 1990s,” Purcell added.
Investors who share Purcell's prognosis for these chronic disease markets will likely follow this deal closely.
This article was produced and syndicated by Wealth of Geeks.