The IPO Buzz: CG Oncology Prices Upsized IPO at $19 – $1 Above Range

Twice: Bladder cancer biotech CG Oncology (CGON) upsized its IPO for the second time this week – by pricing 20.0 million shares at $19.00 – $1.00 above the top of its range – to raise $380.0 million on Wednesday night (Jan. 24, 2024). This is the first biotech IPO of the year – and the buzz around it was hot. At pricing, the company increased both the number of shares and the price. That followed news early Tuesday that the IPO’s size had been raised to 17.0 million shares – up from 11.8 million shares originally – while the price range was kept at $16.00 to $18.00.

CG Oncology‘s stock jumped $10.00 – up 52.6 percent from its $19.00 IPO price – to open at $29.00 on the NASDAQ at 1:36 p.m. EST today (Thursday, Jan. 25, 2024) on volume of about 1.26 million shares. CG Oncology popped up to $31.25 on volume of 3.6 million shares at around 1:56 p.m. EST.

Morgan Stanley, Goldman Sachs and Cantor were the joint book-runners. LifeSci Capital was the co-manager.

Biotech sector funds and players were deemed as “most likely” to get stock.

“The Street has been looking for a hot sector. Oncology is still a very hot place to be,” a veteran IPO pro says.

The timing is good, too. CG Oncology’s IPO came in the midst of a big stock rally this week that drove the Dow to 38,000 for the first time on Monday and sent the S&P 500 to  record highs. The NASDAQ climbed today (Wednesday, Jan. 24, 2024) after Netflix earnings beat expectations.

“This is the perfect market for them to bring this deal in,” the veteran IPO pro says.

CG Oncologybased in Irvine, California, is a Phase 3 clinical biotech focused on developing and commercializing its leading product candidate, cretostimogene, to treat patients with high-risk non-muscle invasive bladder cancer (NMIBC) who are unresponsive to BCG therapy, the standard treatment. (BCG stands for Bacillus Calmette Guerin, a treatment that is in such short supply that it must be rationed.) CG Oncology was founded in 2010, when it was known as Cold Genesys.

“There is significant unmet need for treatments in these patients, given the limitations of currently approved therapies and patient reluctance to undergo radical cystectomy, or the complete removal of the bladder,” the prospectus says.

CG Oncology has completed enrollment for its Phase 3 clinical trial of cretostimogene, a genetically engineered oncolytic virus, as monotherapy for high-risk NMIBC patients who are unresponsive to BCG therapy, according to the prospectus. The company reported interim data in November 2023. It expects to report topline data by the end of 2024.

“If successful, we believe that this trial could serve as the basis for a Biologics License Application (BLA) submission to the U.S. Food and Drug Administration (FDA),” the prospectus says.

Most of the IPO’s proceeds will be used to finance clinical trials.

CG Oncology is also evaluating the use of cretostimogene in two other clinical trials:

  • A Phase 2 clinical trial of cretostimogene in combination with FDA-approved pembrolizumab (Keytruda from Merck) for this same patient population, and
  • A second Phase 3 clinical trial evaluating adjuvant cretostimogene in intermediate-risk NMIBC patients after transurethral resection of the bladder tumor.

Developing and commercializing a new drug is a long and expensive road. That’s why biotechs typically have high net losses and no product revenue when they go public.

For the 12 months that ended Sept. 30, 2023, CG Oncology reported a net loss of $57.91 million on no product revenue.

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