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.