There's a Lot to Love About Mineralys' Valentine's Day IPO

Key Points

• Mineralys Therapeutics added 20% more shares before its Feb 14 IPO to increase liquidity.
• Strong clinical results of hypertension drug candidates suggest long-term stability and growth
• More liquidity will help support development when initial investments start to dwindle
• MLYS looks more favorable than AZN, its only direct drug pipeline competitor, at least for now

 It has been less than a year since Mineralys Therapeutics NASDAQ: MLYS listed its IPO, but the activity has been quite hot, particularly since the top of the year. With 2.71 million in trading volume, there certainly appears to be a lot of interest in the budding clinical-stage biopharmaceutical company. 

But only a few days before MLYS officially goes public (on February 14, 2023), they announced an upsized public option to encourage more early investors and secure a little more liquidity to support early development.  Sure enough, the Feb 10 upgrade helped boost share price by 30% to as much as $21.98 before setting down to its current price of $18.44 per share.

Funding Boost Could Imply Greater Promise

Not long after Structure Therapeutics Inc. NASDAQ: GPCR closed its $161 million upside launch, Mineralys Therapeutics Inc announced they would do the same.  Scheduled for listing on the Nasdaq index under the symbol MYLS, this will mark the second biotech to raise more than $100 million in funding in just a month.  It also marks the first time the Nasdaq a seen a pair like this since May, a hopeful sign of more pending growth in the biotech sector. 

It is a bid that will certainly provide more opportunity for investors to get in on the ground floor, especially since the higher valuation will give them a better position against older and larger entities, like AstraZeneca PLC NYSE: AZN.  With a goal to sell 10 million shares in the initial period–at $16 a piece–the addition of 20% more shares could boost valuation to upwards of $192 million (based on the sale of 12 million shares during the quiet period). 

Of course, there could be even more value if they also manage to sell their scheduled 1.8 million over-allotment as well.  But even if their surplus sale is weak, the IPO will give Mineralys strong liquidity moving forward. MLYS currently has a market capitalization value of $683.32 million.  With a baseline cash value of $120.95 million and more than $158 million in other assets, MLYS will likely be heading to the public market with a full enterprise value of at least $721 million. 

Strong Product Results Suggest Future Growth

Speaking of moving forward, the Radnor, PA-based firm recently completed a phase 2 clinical trial to evaluate the safety and efficacy of their current lead pipeline candidate, an aldosterone synthase inhibitor called lorundrostat.  Also referred to as MLS-101, the aim with this drug is as an add-on for patients living with uncontrolled or resistant hypertension (uHTN/rHTN).  In addition, they expect to start another phase 2 trial for the same drug to treat uHTN and rHTN among the chronic kidney disease population. This will come around the middle of 2023.

The top-line data for both of these studies are expected in early 2024.  These results will establish a foundation for phase 3 programs and, hopefully, eventually head to market.  Mineralys will need that, as the IPO funding will likely run out by then, so a new income stream will be crucial.  

Singular Product Focus Could Help Mineralys Jump Ahead 

This is particularly important because Mineralys licensed molecular properties from Mitsubishi Tanabe Pharma for an initial $1 million with a contract that includes up to $9 million in additional development milestone payments and another $155 million in commercial milestone payments. Mineralys scooped up this drug candidate for its ability to inhibit an enzyme that can effectively lower blood pressure. 

It's a novel concept that is also on the radar of several other companies.  As mentioned, AstraZeneca is a direct competitor in this field, having recently acquired peer CinCor Pharmaceuticals Nasdaq: CINC for $1.8 billion.  However. CinCor's candidate failed to meet the primary endpoint last year, so the lane could be wide open for Mineralys to go head-to-head with AstraZeneca instead.

MLYS share value currently remains around $18.44, representing a 15% premium on the initial $16 price.  With their singularly-focused pipeline–and Cincor’s recent trial miss–MLYS could emerge from this initial public offering as the clear front-runner in its market.

That, of course, could make them a solid long-term investment, particularly since its current share value is highly competitive.  AZN, for example, currently lists at $68.88 per share. That is a 370% premium over MLYS, which could make MLYS a smarter buy on a long-term basis.