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Aardvark Therapeutics, a US biotech group developing a weight loss pill, is planning to raise up to $200mn in an initial public offering as early as this summer, propelled by investor hype over anti-obesity medications, according to people familiar with the matter.
Aardvark’s lead drug — ARD-101 — has succeeded in suppressing hunger cravings in patients with Prader-Willi syndrome, a rare genetic form of obesity, in early-stage trials. It has shown the same promise among people with general obesity.
The San Diego-based biotech is close to completing a pre-IPO financing round in which it will raise between $75mn and $100mn from a group of blue-chip healthcare investors, according to three people familiar with the process.
Investors are excited by ARD-101, a so-called TAS2R agonist, because it does not just activate GLP-1, the gut hormone used in popular weight-loss drugs from Novo Nordisk and Eli Lilly, but it also harnesses CCK. This second hormone could limit widely reported side effects of nausea and wastage of lean muscle mass associated with GLP-1 drugs.
Big drugmakers are rushing to develop drugs that could compete in the anti-obesity market dominated by Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound. Analysts project the market could be worth $100bn by the end of the decade.
If ARD-101’s phase 3 trial is successful, it would also bring to market by 2026 a treatment for Prader-Willi syndrome, which causes weight gain since sufferers never feel full. The syndrome affects up to 20,000 people in the US.
A single Prader-Willi treatment could be priced at several hundred thousand dollars, according to analysts.
Aardvark is working with advisers from Cantor Fitzgerald on a possible public listing aimed at raising between $150mn and $200mn, the people said. An IPO could happen as early as late July as the company looks to cash in on investor excitement about the next generation of weight-loss drugs and a revival in the biotech IPO market.
A total of nine biotechs have gone public on US markets this quarter, raising $1.4bn between them. This is the highest level of activity since the last quarter of 2021 when the industry was still riding a wave of investor exuberance because of the Covid-19 pandemic, according to data from Dealogic.
Aardvark could be valued at approaching $2bn, the people said. Soleno Therapeutics, a rival biotech which is expected to file for US Food and Drug Administration approval for another treatment for Prader-Willi syndrome later this year, is currently valued at nearly $1.4bn. Aardvark was previously valued at nearly $120mn after its Series B round in 2021, according to PitchBook.
Aardvark plans to use the proceeds from its pre-IPO round to fund a late-stage clinical study into ARD-101’s efficacy on Prader-Willi patients and into patients withdrawing from GLP-1 drugs after weight loss. Typically, GLP-1 users regain all the weight they lost after discontinuing the treatment.
Aardvark and Cantor Fitzgerald declined to comment.