Cargo Therapeutics is gearing up for an initial public offering (IPO) that could be one of the biggest biotech listings in 2023. The cancer-focused gene therapy startup aims to raise around $300 million through the sale of 18.75 million shares priced between $15 to $17.
If successful, it would be a rare bright spot in an otherwise dreary IPO market for life science companies this year. Cargo’s offering comes at a time when biotech IPOs have slowed to a trickle amid volatile market conditions.
The company is developing CRG-022, an experimental CD22 CAR-T therapy for certain blood cancers. Cargo’s candidate takes a patient’s own T-cells and engineers them to target and kill cancerous B-cells expressing the CD22 antigen.
Cargo hopes CRG-022 can benefit patients with large B-cell lymphoma who have failed previous CD19 CAR-T treatment. It initiated a potentially pivotal Phase 2 trial for this population in September. Data from the study could support regulatory approval in 2025.
Beyond blood cancers, Cargo intends to study CRG-022 in solid tumors expressing CD22. This includes some forms of breast, lung, colorectal and liver cancers. The company believes its therapy may demonstrate activity in a wider range of advanced cancers than existing CAR-Ts.
Proceeds from the IPO will help fund Cargo’s clinical programs and earlier R&D. According to its SEC filing, the company had $42.4 million in cash at the end of June 2022 but accumulated losses exceeding $77 million. The capital infusion will provide runway through the expected interim Phase 2 data readout.
|Take a moment to take a look at more emerging biotech companies by looking at Noble Capital Markets’ Senior Research Analyst Robert LeBoyer’s coverage universe.
Cargo’s offering will be a key test of investor appetite for preclinical biotech IPOs. These platform companies developing multiple experimental drugs based on a core technology have fallen out of favor recently.
However, Cargo could attract more interest with CRG-022 already in mid-stage testing and potential for near-term commercialization. The FDA has approved several CAR-T cell therapies over the past five years, providing a regulatory pathway for followers like Cargo.
But biotech IPOs in general face challenges in the current environment. Volatility, rising interest rates, and recession fears have rocked stock markets in 2022. Biotech has been among the hardest hit sectors, with the Nasdaq Biotech Index down over 30% year-to-date.
Companies pursuing IPOs have been forced to scale back valuations and offering sizes. Those that do list are often trading below issue price. So far in 2022, only around 15 biotechs have braved public markets compared to 60+ in recent years.
Yet some experts believe companies with innovative therapies and strong data can still obtain IPO financing. Cargo will provide a barometer of latent investor demand for biotech offerings amid the downturn.
A successful IPO could potentially reinvigorate biotech’s depressed financing environment. It may encourage other firms contemplating IPOs to move forward with planned deals.
Conversely, a lackluster response would signal biotech IPOs remain out-of-favor for now. This could lead companies to instead pursue private financing to advance programs and extend runways.
In any case, Cargo’s listing will generate insight into the health of biotech capital markets. The deal’s performance could significantly influence investment decisions and sentiment around the battered sector heading into 2023.
All eyes will be on whether one of biotech’s most promising young companies can buck the prevailing IPO trends. Cargo’s offering will help determine if the window for issuance might finally be opening back up.