Biotech and pharmaceutical companies are well known for raising capital through initial public offerings, or IPOs. Between 2001 and 2023, approximately 24% of IPOs were from biotech and pharmaceutical companies. When looking at the period from 2019 to 2023, 35% of IPOs were from firms in these industries. As such, biotech and pharma IPOs are becoming more and more relevant in the market.
These stocks can lead to massive gains as well as massive losses. These companies usually have little to no revenue. They trade mainly on the results of their clinical trials. Great results can send shares soaring, while poor results can send them plummeting. Below, I’ll detail the three biotech stocks that went public in 2024 that have fared the best so far and what has led to their success.
CG Oncology Nearly Doubles in 2 Days on Institutional Demand
CG Oncology (NASDAQ: CGON) had its IPO on Jan. 24. It is a perfect example of the phenomenon described above. Its IPO price of $19 a share was quickly bid up to $29 per share due to strong institutional demand before retail investors even had access. By the end of Jan. 25, shares closed at just over $37 per share, representing a 96% increase in just two days. Due to this, data providers show the shares flat through 2024 despite actually being up 95%.
The company’s leading drug candidate is CG0070. It is being developed to treat non-muscle invasive bladder cancer (NMIBC). It is currently in two Phase 3 Food and Drug Administration (FDA) trials and one Phase 2 trial. Shares jumped in May after the company announced "class-leading" responses versus approved and other investigational drugs. The current average price target implies an upside of 73%. The company is hoping to release results for one of its Phase 3 trials by the end of the year.
Arrivent’s Drug Is Already Approved in China, Now Looks to FDA
Arrivent BioPharma (NASDAQ: AVBP) had its IPO on Jan. 25. The stock is up 78% based on its IPO price but is up around 57% according to data providers due to the same thing that occurred with CG Oncology. The company’s most important drug right now is firmonertinib. It is being developed to treat non-small cell lung cancer. It’s in one Phase 3 trial and two Phase 1 trials.
An interesting aspect of firmonertinib is that it has been approved in China, albeit for a slightly different version of the disease it is being developed for in the U.S. Since 2021, the drug has generated about $624 million in China. Arrivent has not received any of this revenue, though. Its partner Allist has the commercial rights in China. However, if approved in the U.S., Arrivent has the rights. The company expects to release data from its Phase 3 trial in 2025.
Analysts are less bullish on the company compared to CG Oncology; the average price target implies just a 20% upside. Much of this is likely due to Johnson & Johnson's (NYSE: JNJ) drug RYBREVANT. The FDA approved it for the same indication that Arrivent's Phase 3 trial is testing for earlier this year.
Upstream Looks to Make a Better Asthma Treatment
Upstream Bio (NASDAQ: UPB) had its IPO on Oct. 10; shares are up 49%, largely due to pre-retail trading. Its leading drug program is UPB-101. It is in three Phase 2 trials. They are for treating severe asthma, chronic rhinosinusitis with nasal polyps (CRSwNP), and chronic obstructive pulmonary disease (COPD). The company plans on releasing data for asthma and CRSwNP in the second half of 2026 and the second half of 2025, respectively.
Many treatments for these two diseases exist. However, Upstream believes its drug can provide a better cure. It targets a more root or upstream cause of these conditions compared to what is currently available. It believes that doing so can lead to a greater overall reduction in inflammation associated with these conditions. Due to the recency of its IPO, Wall Street analysts don’t appear to have released price targets on the stock yet.
