The drug disconnect between Iambic and Isomorphic
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Wall Street is scratching its head over Iambic Therapeutics, an AI biotech that plans to go public this week.
The big picture: Either it's the bargain of a lifetime or the private markets are wildly overvaluing one of its top comps, Alphabet-backed Isomorphic Labs.
Catch up quick: Iambic has developed a platform that it believes will be able to identify, develop and commercialize drugs using AI — a feat that thus far has been more dreamed than demonstrated.
- It has a cancer candidate in early clinical trials with over 100 patients, and two more Phase 1 trials in the near-term pipeline.
By the numbers: Iambic would raise around $160 million at a $900 million valuation were it to price at the top of its IPO range, after having raised around $350 million from venture capital firms.
- Around $60 million of the IPO shares would be purchased by Stan Druckenmiller's Duquesne Family Office and existing investor Cathie Wood's ARK Investment Management.
The intrigue: One of the companies identified by Iambic as a competitor is Isomorphic, led by Google DeepMind co-founder Demis Hassabis. It has not announced any clinical trials.
- Last Thursday — the same day that Iambic launched its IPO roadshow — there was a Bloomberg report that Isomorphic "is in early talks to raise new funds at a valuation of at least $40 billion."
Behind the scenes: A source tells me that Iambic was floored by the Isomorphic report, and discussed whether or not to raise its target range.
- No word yet on if that will happen, but don't be surprised if it does.
Zoom in: The valuation disconnect seems to be multi-pronged.
- First, there seems to be a Google/Demis Hassabis premium on Isomorphic. Even if Alphabet board member and Nobel Prize winner Frances Arnold is on Iambic's scientific advisory board.
- Second, Iambic's founding team is viewed as more bio-first, whereas Isomorphic's is viewed as more AI-first. And we all know which one investors currently value more.
- Third, the public markets last year got burned by computational drug discovery setbacks at companies like Recursion and Schrödinger. Iambic would argue that it has an entirely different platform, and promising early data, but it must leapfrog memories that Isomorphic's private market investors don't share.
The bottom line: Biotechs keep going public despite a narrowed IPO window, but pricing remains an open question.
