Q&A: Acelyrin CEO Shao-Lee Lin details biotech's $540M IPO, finding 'diamonds in the rough'

Acelyrin started trading on the Nasdaq Friday morning in one of the largest biotech initial public offerings in recent memory, with $540 million in gross proceeds and potentially $621 million if underwriters exercise their 30-day option to buy more shares.

Endpoints News dialed up Shao-Lee Lin, the California drug developer’s CEO, on Thursday night in advance of Acelyrin’s $SLRN listing, which priced at $18, the high end of its proposed range. In a sign of market appetite for the late-stage immunology biotech, Acelyrin upped the size of its offering twice this week in the lead-up to its debut, growing from 20.6 million to 26.5 million shares before a final tally of 30 million.

Industry insiders say Acelyrin fits the profile of an “A-plus quality” company for a public listing in this market environment, but the IPO likely doesn’t mean an immediate resurgence for the backlog of 50+ private biotechs looking to leap onto Wall Street.

Lin discusses Acelyrin’s pipeline plans, near-term data readouts, “thinking about what the next big thing is going to be,” and “hoping to break through the window” for other private startups to follow suit.

Endpoints: Are you calling from Wall Street?

Shao-Lee Lin: We’re calling from the Nasdaq building. We’re actually having a big celebratory dinner with all our families, and it’s nice.

Endpoints: What’s on the menu?

Lin: Filet mignon, halibut, all being extremely sensitive to being responsible with our resources, as always. It’s a nice thank you to our families for suffering all of us for the last several, well, frankly, about six months since data last summer and then our Series C to accelerate the PsA Phase IIb/III and then the acquisition of ValenzaBio.

Endpoints: We’ve talked about the story of Acelyrin before, but maybe start with a little background on what Acelyrin set out to do and what being a public company will mean for the clinical and potential commercial plans.

Lin: We’re a late-stage clinical biopharma company at this point. Our goal is really to build what we hope will be a leading immunology portfolio. Our business model is about identifying, acquiring and then accelerating the development and commercialization of things that we like to call “diamonds in the rough.” Drug candidates or candidates as potential new medicines where, based on science and the evolving science in medicine, where we can hypothesize why we think that candidate has the potential to be meaningfully different for patients and then ultimately how we would go about testing that to determine whether or not that was true.

We’ve been tremendously fortunate. Our first program is a molecule called izokibep. It’s a small protein therapeutic that we in-licensed in August of ’21, and within the last, boy, I guess within the last year, we have been able to see two datasets read out, one in hidradenitis suppurativa, a terrible chronic inflammatory skin condition, and the other psoriatic arthritis, including both primary endpoint in psoriatic arthritis, as well as even long-term data there.

The bottom line there is that both of those datasets have been very consistent with regard to the clinical responses that we’ve seen, really supporting the hypothesis that we originally put forth about the potential for this particular molecule’s small size and very high potency to have the potential to maybe move the needle in a different way than what’s previously been seen for even the same mechanism of action. So we’ve been tremendously fortunate with regard to those data.

That led us toward the end of last summer. We closed a Series C so that we could, based on the PsA Phase II data, accelerate into a Phase IIb/III trial. Then the more recent HS data, which was presented at the American Association of Dermatology meeting back in March, really enables us to continue to think about what we thought were very compelling results, and … in January of this year, we announced that we acquired another private I&I company, ValenzaBio, the lead program of which was a molecule called lonigutamab positioned for thyroid eye disease, which is an indication that we know well, many of us having been involved in the initial approval of the first and currently only approved therapy for that disease state.

Because of the combined pipeline opportunity, because of the really interesting and remarkable data, we felt from HS and PsA for our lead program, and despite being well-capitalized and having already accelerated some of these aspects of the program, we really felt like it was reasonable at this time to present ourselves to the public markets for the potential of a public offering because there’s really so much opportunity to reply capital in what we think would be very meaningful ways to support these programs.

Endpoints: I want to talk a little bit more about timing. There have been a few biopharma IPOs this year, so can you talk about some of the other factors that led Acelyrin to choose early May, and I imagine when you did make the decision, you probably didn’t think that Kenvue was going to happen the day before.

Lin: We knew that Kenvue was the only other one on the docket. There were two other biotech IPOs in the first quarter, and it’s been really very quiet. Obviously, there’s been a lot of fluctuation, even volatility, within the context of the greater external environment and market that everyone’s been watching closely, and who can predict things like a good old-fashioned run on a bank? Definitely factors out there that are outside any one group’s control that we’ve had to watch closely.

That having been said, I think that we’ve been tremendously fortunate to have a number of different factors working for us. One is I’ve been fortunate to work throughout my career with incredibly talented people. We’ve collected a number of those individuals who worked with me not just through one, two, even three or more companies, and so an incredibly experienced team is at least one part of that equation. Another part is the clinical data, as we talked about. I think that that’s definitely part of what helps you in a difficult market backdrop. The third is what we haven’t talked about yet, which is a lot of data milestones coming up in the near term that are very data-rich. That, again, makes it a very reasonable time for us to at least consider whether or not the public markets are open for someone like us.

And then finally, I think within the context of biotech, again, we’ve been fortunate in that a deep area of core expertise for us has been across our careers, immunology, even though many of us have worked across all of the usual therapeutic areas. Immunology has been central to a lot of our careers throughout the context of industry, and that seems to be an area that also is faring well and has a lot of interest from investors.

Endpoints: And what about price and size of the offering? $540 million, possibly $621 million. What’s the mathematical engineering behind those numbers?

Lin: At the highest level, the point is really to enable us to have a runway that covers all of our near-term, big data milestones across the next 18 to 24 months and then beyond that as well. Within the next 18 to 24 months, we have Phase IIb/III or the first study within the context of what we hope to be the registrational packet for three different indications for our lead program. Studies in HS, PsA as well as uveitis, all Phase IIb/III primary endpoints. Then for our other pipeline programs, lonigutamab in thyroid eye disease reading out its proof of concept in that 18- to 24-month timeframe as well as an earlier-stage program that we just got our IND, an anti-C-KIT molecule, which will also read out its proof of concept study in chronic urticaria.

Endpoints: You talked earlier about the ValenzaBio acquisition, and I imagine your time has been pretty consumed lately, but what should we expect in terms of the in-licensing, acquisition front going forward?

Lin: Obviously, given the pipeline rundown I just went through, and the public offering is really largely about advancing that pipeline we’ve got, there’s a tremendous amount to execute on and a tremendous amount of opportunity to do good within the context of all of the different patient populations and indications that we’re covering there, even in a very late-stage way. That having been said, our business model, as we shared at the beginning, will continue to be about identifying and acquiring those things that we really think, in our hands, we may create unique value based on our experience, and that could provide clinically meaningful differences to patients. So we’re always going to be, at a minimum, opportunistic about that. Lots of folks come to us with these opportunities to assess. ValenzaBio actually came to us in that way, as well, and we feel like that turned out really well.

There’s a lot to do at this juncture. I think for the very near term, it will most likely be more opportunistic, and certainly, later on in the year, we can start thinking about what the next big thing is going to be.

Endpoints: Do you have time for one more? I wanted to know what your message is for other biotechs that are in the hopper looking to go public as well.

Lin: One of the things when we started this process is that I really hoped, given our profile, it seemed like we had a good chance, perhaps a better chance, than most. Part of the goal was, of course, to do well for Acelyrin and all the things that are in our portfolio that we hope to advance and ultimately do well for patients. But part of it was also we hope to serve the greater biotech community and not just open the window, but hoping to break through the window with regards to enabling the sector to continue to advance in this way.

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