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Contineum prices biotech’s latest IPO, raising $110M for neuroinflammatory drugs

Contineum Therapeutics has raised $110 million in an initial public offering, the biotechnology industry’s 10th of the year, to advance a group of drugs it’s developing for neurological and inflammatory diseases.

The biotech startup on Thursday sold 6.875 million shares at $16 apiece, the low end of a range it set earlier this week.. It’ll begin trading on the Nasdaq stock exchange on Friday under the symbol “CTNM.”

Contineum’s offering keeps biotech IPOs on their strongest pace in three years, according to BioPharma Dive data. By this time last year, only four drug startups had gone public, raising $375 million. In 2022, nine companies had pulled in $744 million.

The IPO activity has been accompanied by a step-up in funding for both public and private biotech companies. Earlier this week, analysts at the investment bank Jefferies wrote that public biotechs raised about $11 billion in stock offerings between January and March, the most in more than three years. William Blair analysts, in a separate report, found that biotech startups raised $5.1 billion in the first quarter, a 28% increase from 2023. That included a “resurgence” in financings of at least $100 million, with 21 of 60 rounds hitting that mark, they wrote.

The trends suggest a possible reversal from the sector’s downturn and “the potential advent of an ‘up cycle’ driven by anticipated rate cuts, continued M&A, and strong fundamentals,” Jefferies analysts wrote.

Still, the pace of IPOs remains short of a peak a few years ago. Wall Street investors have also mostly rewarded biotechs with drugs in clinical testing, particularly those in the later stages of development. Since the start of 2023, companies with drugs in Phase 2 testing at the time of their IPO have raised a median of $129 million, versus $80 million for those in Phase 1 and $52 million for preclinical companies, data show.

With a $110 million IPO haul, Contineum fits that pattern. The company has two drugs in testing. One, partnered with Johnson & Johnson, is in a mid-stage trial in relapsing remitting multiple sclerosis and an earlier trial in depression. Another wholly owned drug is in a Phase 1 trial for idiopathic pulmonary fibrosis.

The J&J-partnered drug inhibits a receptor known as M1R that’s involved in multiple cognitive processes. Contineum claims in its IPO filing that the candidate is the most advanced drug of its kind in clinical development. The biotech’s other drug blocks a receptor called LPA1R, an increasingly popular target for idiopathic pulmonary fibrosis. Bristol Myers Squibb and Structure Therapeutics are working on similar medicines, but Contineum claims preclinical data show its drug may be “differentiated.”

Contineum was previously known as Pipeline Therapeutics and traces its roots back to Inception Sciences, an initiative biotech investor Versant Ventures started to turn academic research into new companies. The team behind an Inception startup later acquired by Roche, Inception 5, joined with Versant and others to launch what’s now Contineum.

Versant owns 32% of the company, according to the IPO filing.