Viela Bio shares close up big on firm’s first day of trading

Listen to this article

Gaithersburg-based biotech firm Viela Bio made a splash in its stock market debut Thursday, closing 23% above its initial share price and allaying fears of a depressed IPO market.

Viela sold 7.9 million common shares in its initial public offering as it sought to raise $150 million. The firm’s share price jumped as high as 27% in trading Thursday afternoon. The price closed at $23.31, up 23% from its initial price of $19 a share.

The shares debuted on Nasdaq under the symbol VIE.

The firm’s IPO came as the general IPO market has been rattled by poor debuts and delays from high-profile companies like Uber and WeWork.

Viela was spun out of AstraZeneca in February 2018 with $250 million in financing and a promise of creating 100 jobs within five years. The firm announced it had raised $75 million in Series B financing in June.

The firm filed for an IPO at the end of August as it has moved closer to commercializing its first drug therapy.

Viela spunout of MedImmune, now just AstraZeneca, after AstraZeneca retired the MedImmune branding earlier this year, with six molecules. One of those, inebilizumab, was accepted for review for its Biologics License Application by the Food and Drug Administration the same week Viela filed for its IPO.

Inebilizumab seems to be the therapy that is closest to making a difference for Viela’s bottom line. The company believes inebilizumab can treat patients with neuromyelitis optica spectrum disorder, a rare autoimmune disease.

Viela expects to use much of the money from the IPO to help fund its clinical trials. 

The company had a $190.3 million operating loss last year and $26.4 million operating loss through June this year. Viela also still relies on AstraZeneca, it’s largest shareholder, for much of its infrastructure.

Viela initially suggested it could price its offering between $19 and $21 a share, but settled on $19 a share Wednesday. 

The IPO was underwritten by Goldman Sachs, Morgan Stanley and Cowen.

Viela may have priced its shares at the low end of the range because of general concerns about the stock market and the IPO market.

Of the first 114 companies to debut this year, 63 are trading above their IPO prices and 51 are trading below their IPO prices, according to the University of Maryland’s Smith School of Business.

The IPO market has also been “tainted” by the issues with high-profile companies, said Karyl Leggio, a professor of finance at Loyola University Maryland’s Sellinger School of Business.

“They’re part of the IPO market and the IPOs in general sort of have a feel. When people start pulling back on IPO’s, they’re all negatively impacted,” she said. “(Viela is) just a little bit challenged by the timing and the jitters in the market at the moment.”

That IPO market has been fretting since high-profile debuts from Uber, Lyft and Peloton flopped and WeWork and Hollywood conglomerate Endeavor pulled their offerings.

Those companies operate at a different scale than Viela, with their offerings expected to raise billions. Still, they affect the general market.

Most of those companies project profitability along a growth plan. Viela’s plan is different. If it can successfully develop its drug therapies, it will be successful.

If it fails to do that, the company will likely fail.

“There’s always a risk with pharmaceuticals, but you’re investing in something that’s different than a growth plan,” Leggio said. “The scale is so very different. It’s unfortunate that they are a bit tainted by the IPO market.”