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Recent IPOs show investor appetite is strong for biotechs

Ines Ferré
Markets Reporter

Investor appetite is strong for biotechs. Adaptive Biotechnologies (ADPT) is up on its second day of trading, after soaring more than 95% yesterday. The Seattle-based company, founded in 2009, reads and translates genetic code to develop personalized diagnostics and therapeutics for patients.

The company’s long-term vision is to become an integral part of primary care. ”You go in once a year, you get your blood drawn, we you look at your immune system. And we diagnose many diseases at one time,” said CEO and co-founder Chad Robins.

Microsoft (MSFT) is an investor in the company, which Robins describes an immune medicine information platform. “It’s a convergence play between a kind of biotech, and technology and machine learning with our Microsoft collaboration.”

Adaptive Biotechnologies currently has two commercial products used by researchers and pharmaceutical companies. One is a tool for monitoring minimal residual disease in certain blood cancers. “We can look at whether a drug has worked or not on the patient. And next we can determine whether that patient is potentially going to relapse from a molecular level before they relapse clinically, before they go into a doctor's office and present with symptoms,” said Robins.

Biotech market

On the same day Adaptive went public, so did Change Healthcare (CHNG), Morphic Holdings (MORF), and BridgeBio Pharma (BBIO), which opened more than 80% above its IPO price.

BridgeBio Pharma focuses on medicines targeting diseases that arise from defects in a single gene, as well as cancers with clear genetic drivers.

“Most diseases are just black boxes, you don’t understand what’s going on,” CEO Neil Kumar told Yahoo Finance. “For the diseases we go after it is very clear, it is that single mutation, and what that enables us to do is to say, how do we counteract exactly what that mutation is doing,” he added.

BridgeBio Pharma highlights that rather than investing in one drug, the company is focusing on 15 development programs, which fall into three categories: Mendelian, Oncology and Gene Therapy.

As with a number of unicorns this year, Morphic, Adaptive Biotechnologies and BridgeBio Pharma fall into the ‘not profitable yet’ category.

Even though BridgeBio Pharma has not generated revenue from product sales, Kumar says his company has a timeline. “Certainly the only way to build something that's reasonable and sustainable is to get to the point where you have commercial products, where you're really making a difference for patients,” said Kumar. “Having cash flowing products, I think is a big deal and I think we should be able to get there in the next four to five years,” he added.

Despite the warm IPO reception and recent biotech acquisitions, overall market performance in biotech has lagged the S&P (^GSPC). Biotech companies in particular run the unpredictable risk of trials which may or may not meet endpoints. Earlier this year Biogen (BIIB) plunged 25% when it discontinued its clinical trial for an Alzheimer’s treatment.

Ines Ferre is a markets reporter for Yahoo Finance. Follow her on Twitter at @inesreports

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