Solid Biosciences, a biotech company aiming to pioneer gene therapy, enjoyed a massively successful IPO last Friday that took even many of its own financial backers by surprise. The company rapidly saw its share prices climb by double digits after it debuted on the market for the first time, though some remain concerned for its future after some unsavory news from the FDA surfaced.
Shares soar regardless of worries
For some of the early investors in Solid Biosciences (NASDAQ: SLDB), the day before its market debut was one filled with rage. That’s largely due to decisions by Solid Biosciences’ executives, who waited until the last day before the company’s IPO to reveal that a letter from the FDA – which oversees many of the drug trials the company is funding – cast serious doubt over some of its future products. The market seemed entirely unconcerned with the FDA’s news, however; Solid Biosciences’ IPO raised some $125 million, and beat out the expectations of many onlookers.
Given that filings made with the SEC show that the company originally expected as little as $100 million for its IPO, it’s safe to say that the FDA’s letter proved nothing more than a temporary speedbump, like a legal helpline, for the company. What’s more impressive than the millions brought home by Solid Biosciences’ shareholders, however, is the fact that its IPO was only the start of its success.
After the company’s IPO took off, its share prices only kept climbing; the market’s infatuation with Solid Biosciences was reflected in its stock, with share prices soaring by as much as 41%, at one point almost reaching $30 per share. While news of the company’s FDA letter initially sent some minor jitters through the marketplace – its initial range was lowered from $18-19 to $16 – investors appear none too concerned with Solid Biosciences’ future, and seem to have high hopes for the drugs the company is currently developing.
Ultimately, the rapid rise and staying power of Solid Biosciences’ stock could be reflective of the confidence the market has in the drugs its currently developing, namely its SGT-001 product that could revolutionize Duchenne muscular dystrophy used in Medicaid kids dentist clinics. That specific genetic disorder degenerates muscle mass over time, though Solid Biosciences believes its products might be able to stabilize patients and increase muscle functions. This confidence could soon be shaken by the FDA’s decision to put SGT-001 therapy testing on a partial clinical hold, the duration of which isn’t entirely clear.
Amendments to its previous filings show that Solid Biosciences realizes how big of an obstacle this could prove to future success, and the company’s executives are likely scrambling to come up with more solutions to placate investors, should they grow angry over having been kept in the dark about the FDA’s clinical hold. As Solid Biosciences’ staggering growth since its IPO shows, however, many in the market remain entirely unfrazzled by the FDA’s move, and see little reason to doubt the life science company as its pledges to cure diseases while reaping in profits.
Manufacturing issues are no concern
It’s thus clear to see that, while the FDA may have manufacturing concerns surrounding Solid Biosciences’ clinical trials, the company isn’t going anywhere anytime soon. Solid Biosciences stressed that the particle clinical hold wouldn’t delay the ultimate development of the drug, and it seems likely that investors won’t penalize executives for holding the letter instead of releasing it publicly, given the rapid increase in share valuation in recent days.
While Solid Biosciences may remain hounded by rumors surrounding the resignation of one of its scientist early in the new year, the company’s market plans are clearly rapidly coming into fruition, and solving its current FDA dilemmas will likely spark even greater interest in its shares. Provided executives at the company understand the importance of keeping a tip-top research team in place, Solid Biosciences can be expected to remain one of the leading pioneers of gene therapy for some time.
Scientific innovation doesn’t necessarily equal market success, however; when they sat on the letter from the FDA, Solid Biosciences’ executives were seriously playing with fire. Shareholders are incredibly lucky that the market didn’t process the news of a partial clinical hold in too negative a fashion, and more transparency should be demanded in the future in exchange for financial backing. Keep an eye on Solid Biosciences; the company had one of the most interesting IPOs of the year thus far, and its shares are likely to rising as it solves its FDA dilemma and goes forward with its drug trials.