Generate Biomedicines shares fall in weak Nasdaq debut for drug developer

By Pragyan Kalita and Pritam Biswas

Feb 27 (Reuters) - Flagship-backed Generate Biomedicines' GENB.O shares fell more than 6% in their Nasdaq debut on Friday, giving the drug developer a valuation of $1.91 billion, as lingering market volatility kept investors cautious toward new listings.

The Somerville, Massachusetts-based company's shares opened at $15, compared with the IPO price of $16. It raised $400 million in its U.S. initial public offering on Thursday, after selling 25 million shares within its marketed range of $15 to $17 apiece.

Biotech IPOs have gained momentum as interest rates ease and capital returns to the sector, but the recovery remains uneven, with investors staying selective.

Eikon Therapeutics EIKN.O and Agomab Therapeutics AGMB.O, health-sector companies that have recently gone public, were trading below their offer prices as of last close.

AI, CAPITAL AND BIG BACKERS

Generate Biomedicines, which describes itself as a pioneer in applying artificial intelligence to biotechnology and drug design, plans to use much of the IPO proceeds to complete two Phase 3 trials of its lead asthma drug.

"Machine learning provides access to tools that traditional drug discovery does not," said President and CFO Jason Silvers in an interview with Reuters, when asked how AI is shaping companies such as Generate.

Generate Biomedicines' early work includes a COVID‑19 antibody that showed broad, variant‑resistant activity, though the company has shelved its development in light of changing market conditions for preventive COVID‑19 therapies.

"From a timing perspective, market conditions aside, this is a great time because we have a number of initiatives that require capital," Silvers said.

Noubar Afeyan, who co-founded drugmaker Moderna MRNA.O and is among the board chairs of Generate, is expected to control 49% of the shares through investment firm Flagship Pioneering. The board also includes Nobel laureate Frances Arnold and Moderna CEO Stéphane Bancel.

Generate's CEO Michael Nally is also a CEO-partner at Flagship, which creates and backs biotech companies.