Flagship-backed Generate Biomedicines eyes $2.2 billion valuation in US IPO

Adds analyst comment in paragraphs 3,6,7

By Arasu Kannagi Basil

Feb 23 (Reuters) - Drug developer Generate Biomedicines said on Monday it was targeting a valuation of up to $2.17 billion in its U.S. initial public offering, tapping into a resurgent biotech market that has seen listings pick up pace.

Backed by venture firm Flagship Pioneering, which has incubated several biotechs, including Moderna MRNA.O, Generate is seeking to raise up to $425 million in its IPO by offering 25 million shares priced between $15 and $17 apiece.

"The backing from Flagship Pioneering and partnerships with Novartis and Amgen, provides strong institutional credibility to the offering. Recent biotech listings partnering with large pharmaceutical firms have often emerged as takeover targets down the line, with the potential for large premiums," said IPOX Research Associate Lukas Muehlbauer.

Biotech IPOs are off to a strong start this year after a sluggish 2025, supported by easing interest rates and fresh capital inflows into the sector. Aktis Oncology AKTS.O, Agomab Therapeutics AGMB.O, Veradermics MANE.N, Eikon Therapeutics EIKN.O and SpyGlass Pharma SGP.O have already accessed U.S. capital markets this year.

Generate, founded in 2018 by Flagship, uses AI to replace trial-and-error drug discovery methods and create novel protein-based therapeutics. Its pipeline is focused on immunology and oncology. Flagship CEO Noubar Afeyan holds 57.7% stake in the Somerville, Massachusetts-based company.

"Valuation will be the main focus, as Generate presents itself as an AI drug discovery platform first, rather than traditional pharma," Muehlbauer said.

"While AI definitively has a role in the sector, the industry has yet to see a fully AI-discovered drug achieve FDA approval, and investors will demand clear proof that the technology genuinely improves how drugs are made."

Generate's lead product candidate, GB-0895, to treat severe asthma is being tested in a late-stage trial. The study is expected to be fully enrolled by the first half of 2028.

The company aims to list on the Nasdaq under the symbol "GENB". Goldman Sachs, Morgan Stanley, Piper Sandler, Guggenheim Securities and Cantor are the underwriters for the offering.

(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Shilpi Majumdar)

((ArasuKannagi.Basil@thomsonreuters.com;))