Biotech and pharmaceutical companies are renowned for their capital-raising efforts through initial public offerings, or IPOs. Over the past few years, the prominence of biotech and pharma IPOs in the market has been on the rise. In fact, between 2019 and 2023, approximately 35% of IPOs were from companies in these industries, showcasing their increasing relevance in the financial landscape.
Investing in biotech stocks can be a high-risk, high-reward game. These companies often have little to no revenue and trade based on the outcomes of their clinical trials. Positive trial results can send their stock prices soaring, while negative results can cause a significant drop in value. In this article, we will delve into the three biotech stocks that went public in 2024 and have shown promising performance since their IPOs, shedding light on what has contributed to their success.
## 1. CG Oncology Nearly Doubles in 2 Days on Institutional Demand
CG Oncology (NASDAQ: CGON) made its market debut on Jan. 24, and its stock price saw a remarkable surge within just two days of trading. The institutional demand for the company’s IPO led to a rapid increase in share price from $19 to $29, eventually closing at over $37 per share on Jan. 25. This represented a staggering 96% increase in value in a mere two days, showcasing the strong investor interest in the company.
The company’s flagship drug candidate, CG0070, is currently undergoing clinical trials for the treatment of non-muscle invasive bladder cancer (NMIBC). With two Phase 3 FDA trials and one Phase 2 trial in progress, CG Oncology witnessed a significant uptick in its stock price following positive trial results. Analysts project a potential upside of 73% based on the current average price target, with the company expected to release results from one of its Phase 3 trials by the end of the year.
## 2. Arrivent’s Drug Is Already Approved in China, Now Looks to FDA
Arrivent BioPharma (NASDAQ: AVBP) entered the market on Jan. 25 and has seen a 78% increase in its stock price since its IPO. The company’s lead drug, firmonertinib, is aimed at treating non-small cell lung cancer and has already received approval in China for a slightly different indication. Despite generating substantial revenue in China, Arrivent has yet to benefit from it as its commercial rights lie with a partner. However, with expectations of FDA approval in the U.S., the company anticipates a significant boost in its market position.
Although analysts are less optimistic about Arrivent compared to CG Oncology, with an average price target suggesting a 20% upside, the company’s prospects remain promising. The recent approval of a competing drug by Johnson & Johnson for the same indication as Arrivent’s Phase 3 trial may have tempered market expectations, but the potential for growth still exists.
## 3. Upstream Looks to Make a Better Asthma Treatment
Upstream Bio (NASDAQ: UPB) went public on Oct. 10 and has seen a 49% increase in its stock price, largely driven by pre-retail trading activity. The company’s flagship drug program, UPB-101, is currently undergoing three Phase 2 trials for the treatment of severe asthma, chronic rhinosinusitis with nasal polyps (CRSwNP), and chronic obstructive pulmonary disease (COPD). Upstream’s unique approach targets the underlying causes of these conditions, aiming to provide a more effective treatment option compared to existing therapies.
With data expected to be released for asthma and CRSwNP trials in the coming years, Upstream Bio is poised for further growth. While Wall Street analysts have yet to set price targets for the stock, the company’s innovative approach to disease treatment holds promise for investors seeking opportunities in the biotech sector.
In conclusion, investing in biotech IPO stocks can be a lucrative yet volatile venture. The success stories of CG Oncology, Arrivent BioPharma, and Upstream Bio highlight the potential for significant gains in this sector. However, it is essential for investors to conduct thorough research, assess the risks involved, and stay informed about the latest developments in the biotech and pharmaceutical industries to make informed investment decisions that align with their financial goals.