IPO Launch: Atea Pharmaceuticals Finalizes $253 Million IPO Plan


Atea Pharmaceuticals (AVIR) intends to raise $253 million in an IPO of its common stock, according to an S-1 registration statement.

Boston, Massachusetts-based Atea was founded to develop treatments for virus-borne diseases such as Hepatitis C, Dengue and more recently Covid-19.

Management is headed by founder, president, CEO and Chairman Jean-Pierre Sommadossi, Ph.D., who was previously co-founder at Idenix Pharmaceuticals.

Below is a brief overview video of Hepatitis C:


Source: Johns Hopkins Medicine

The firm's lead candidate, AT-527, is being developed for the treatment of the Covid-19 virus, SARS-CoV-2.

Management expects to report Phase 2 interim safety data by the end of 2020 and initiate Phase 3 outpatient trial by 1H 2021.

Below is the current status of the company’s drug development pipeline:

Source: Company S-1 Filing

Investors in the firm have invested at least $69 million and include JPM Partners, Morningside Investments, Cormorant and Bain Capital Life Science Investors.

The global market for a successful Covid-19 treatment is difficult to quantify, but is likely to be well above $20 billion per year, as diagnostics and detection kits markets are $17 billion and $4.6 billion each, respectively.

Key elements driving this expected growth are continued expansion of the number of persons infected by the virus across the globe.

Also, there are several parts to the treatment market, including:

  • Antiviral medicine
  • Plasma therapy
  • Immunotherapy
  • Life support
  • Others

Major competitive vendors that provide or are developing Covid-19 treatments include:

  • Gilead Sciences (GILD)
  • Fujifilm Pharma
  • Ridgeback Biotherapeutics
  • Regeneron Pharmaceuticals (REGN)
  • Eli Lilly (LLY)
  • Others

Atea’s recent financial results are typical of a clinical stage biopharma in that they feature no revenue and significant R&D and G&A expenses associated with its development efforts.

Below are the company’s financial results for the past two and ½ years (Audited PCAOB for full years)

Source: Company registration statement

As of June 30, 2020, the company had $115.8 million in cash and $7.1 million in total liabilities. (Unaudited, interim)

Atea intends to raise $253 million in gross proceeds from an IPO of eleven million shares of its common stock, offered at a proposed midpoint price of $23.00 per share.

No existing shareholders have indicated an interest to purchase shares at the IPO price, a frequent feature of life science IPOs.

Assuming a successful IPO, the company’s enterprise value at IPO would approximate $1.7 billion, excluding the effects of underwriter over-allotment options.

Management says it will use the net proceeds from the IPO as follows:


We currently anticipate that we will use the net proceeds from this offering, together with our existing cash and cash equivalents, to advance the clinical development of AT-527 for the treatment of moderate COVID-19, AT-787 for the treatment of chronic HCV, AT-752 for the treatment of dengue, our RSV program, and the remainder, if any, for working capital and other general corporate purposes.

Management’s presentation of the company roadshow is available here.

Listed bookrunners of the IPO are J.P. Morgan, Morgan Stanley, Evercore ISI, William Blair.


Atea is seeking public capital market funding to advance its pipeline of treatments for moderate Covid-19, Hepatitis C and other conditions.

The firm’s lead candidate, AT-527, is expected to report Phase 2 topline data in the first half of 2021.

The market opportunities for treating Covid-19 and HCV are large, though the firm will face significant competition in the Covid-19 treatment market.

As to collaborations, in October 2020, Atea granted an exclusive license for Roche to develop and commercialize AT-527 outside of the U.S.

J.P. Morgan is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 57.7% since their IPO. This is a top-tier performance for all major underwriters during the period.

As to valuation, management is asking IPO investors to pay an enterprise value that is far higher than the typical clinical trial stage biopharma.

While it appears the firm’s lead candidate has passed Phase 1 safety trials, we don’t have any efficacy data on which to base an informed opinion about its prospects.

Given the extremely high valuation management is placing on the IPO, my opinion is NEUTRAL due to excessive valuation.


Expected IPO Pricing Date: October 29, 2020

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(I have no position in any stocks mentioned as of the article date, no plans to initiate any positions within the next 48 hours, and no business relationship with any company whose stock is mentioned in this article. IPO stocks can be very volatile in the days immediately after an IPO. Information provided is for educational purposes only, may be in error, incomplete or out of date, and does not constitute financial, legal, or investment advice.)

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