Pontifax AgTech Achieves 2nd Exit as Precision Biosciences IPOs with $870m Valuation
Precision Biosciences, the gene-editing startup, started trading on the Nasdaq stock exchange today after raising a $126.4 million IPO, valuing the company at $870 million.
The IPO will achieve an exit for growth stage agrifood tech investor Pontifax AgTech, which invested $12.5 million in Precision Bioscience’s $110 million Series B in July 2018 and its subsequent pre-IPO convertible note financing in February 2019.
Pontifax AgTech targets returns of three times its investments and sources close to the deal said it is likely the Precision Biosciences exit will come close; shareholders can only sell their shares 180 days after a company starts trading on a public exchange so it’ll be some time before this can be confirmed.
The IPO performed well by all standards after pricing in the middle of the share price range at $16 a share. At a share price of $17.94 when AgFunderNewswent to press, it’s just above two times Pontifax’s investment.
This is the second exit for Pontifax AgTech’s first fund in just 18 months; it achieved a 4x exit after John Deere acquired Blue River Technologies for $305 million in the summer of 2017.
Food & Ag Focus
While Precision Biosciences focuses on using its ARCUS gene editing technology — different from the better-known CRISPR — for cancer therapies, it has a wholly-owned subsidiary focused on the food and agriculture industries called Elo Life Systems. Elo Life Systems is specifically focused on developing nutritionally-improved canola, sweeteners, and pulses for protein. Agricultural clients so far have included BASF, Bayer CropScience, Cargill, and DuPont Pioneer.
Gene-editing is making waves in the agriculture industry as a tool companies can use to improve food crops without the genetically modified label. Simply, this is because it doesn’t introduce any foreign genetics into the DNA of a crop, which is when the USDA would step in to regulate it as GMO. The European Union, however, made the decision still to regulate gene-edited products as genetically modified, which means developers and researchers face big hurdlesin deploying the technology in the region.
One of the first startups to bring the technology to the agriculture sector was Caribou Biosciences, another Pontifax portfolio company. Caribou is licensed to use CRISPR Cas-9, the gene-editing method that brought the technology into the mainstream as a cheap and more accessible tool for improving plant characteristics than traditional methods. But there is a range of different gene-editing tools, including newer versions of CRISPR Cas-9.
Precision Bioscience’s ARCUS is one such alternative that’s derived from a natural genome editing enzyme called a homing endonuclease. According to Precision Biosciences this enzyme “has unparalleled specificity and can be customized to recognize a DNA seuence within any target gene.” Many argue the same can not be said for CRISPR technologies, that use Cas-9 and other enzymes.
It uses the ARCUS gene-editing platform to delete, excise, correct or edit plant genetics for the required characteristics, according to a diagram on its website.
Precision Biosciences is the latest in a growing list of gene-editing businesses to list on stock exchanges, including other agriculture-focused groups. Calyxt, which is developing a potato variety that doesn’t bruise, high-fiber wheat, low-gluten wheat, herbicide tolerant wheat, lower saturated fat canola, and high-oleic soybeans using the TALEN gene editing tool, listed on the Nasdaq last year at a valuation of $212 million. Its shares are currently trading around $16, which is double its IPO price. Earlier this year Calyxt announced the appointment of former president & CEO of Bayer CropScience Jim Blome as its CEO.
Cibus hasn’t had as much luck, delaying its IPO in February. The company has been developing new canola varieties using a combination of different gene-editing tools.
Pontifax Fund II
Pontifax‘s $105 million Fund I is now fully deployed and the firm is currently raising a $250 million second fund set to hold a first close this year. It targets institutional investors including university endowments, funds of funds, insurance companies, and asset managers. Investors in the last fund included David Bonderman, founder of private equity giant TPG Capital, and Tony Ressler, founder of Ares Management, the global alternative investment manager — media mogul Haim Saban, and Stewart Resnick, founder of The Wonderful Company, the largest vertically integrated permanent crop company in North America.
Alexandria Venture Investments, which invests in agtech among other industries, is another shareholder alongside a long list of healthcare and generalist investment groups: Franklin Templeton Investments, Cowen Healthcare Investments, Brace Pharma Capital, OCV Partners, Adage Capital Management, Cormorant Asset Management, Gilead Sciences, Vivo Capital, Alexandria Venture Investments, Ridgeback Capital, Agent Capital, venBio, F-Prime, RA Capital Management, Amgen Ventures, Osage University Partners, DUMAC, and the Longevity Fund and entities affiliated with Leerink Partners.