December 21, 2018 / 8:18 PM / 8 months ago

Alector, Gossamer chase Moderna with biotechnology IPOs-sources

Dec 21 (Reuters) - U.S. biotechnology startups Alector LLC and Gossamer Bio are preparing for initial public offerings (IPOs) in early 2019, people familiar with the matter said on Friday, after Moderna Inc earlier this month became the sector's biggest company to ever launch an IPO.

Companies have been accelerating their IPO preparations, as a stock market sell-off in the last three months wiped out the gains of most shares for the year and raised the prospect of the window for stock market debuts gradually closing.

Alector and Gossamer have both hired underwriters for their IPOs and could target public market valuations of around $1.5 billion and $1 billion respectively, the sources said, cautioning that the exact timing of the stock market flotations depend on market conditions.

The sources asked not to be identified because the IPO plans are confidential. Gossamer declined to comment while Alector did not immediately respond to a request for comment.

Investor demand for high-growth companies and the prospect of consolidation with larger peers helped spur IPO activity for biotechnology firms in 2018, the busiest IPO year for the sector since 2014, according to data provider Dealogic.

Moderna raised $604 million in its IPO on Dec. 6. Its shares have dropped 36 percent since then, much more than Nasdaq Biotechnology Index, which has dropped 14 percent over the same period.

San Francisco-based Alector develops therapies that harness the immune system to cure neurodegenerative diseases, such as dementia, as well as cancer. It has received backing from the likes of Google Ventures and AbbVie Inc and closed its series E funding round earlier this year with a $913 million raise, according to PitchBook.

Gossamer, based in San Diego, focuses on developing drugs in the immunology, inflammation and oncology sectors. It clinched a $650 million valuation in a private fundraising round in July led by Hillhouse Capital. (Reporting by Joshua Franklin and Carl O'Donnell in New York; Editing by Cynthia Osterman)

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