Lycia IPO: Food allergy biotech cofounded by Nobel laureate debuts on the Nasdaq

Early trading in Lycia Therapeutics, a biotech developing drugs that selectively remove proteins involved in allergies and autoimmune diseases, has begun on Freedom’s client trading platform. The company was cofounded by Nobel laureate Carolyn Bertozzi and bases its technology on her research. Lycia is set to make its Nasdaq debut during Friday’s regular session under the ticker symbol LYCA.

Lycia raised $317.5 million in its Nasdaq IPO. It sold 17.64 million shares at $18 apiece, the top of its previously announced price range. That values the company at $990.6 million, estimates Bloomberg. Jefferies, TD Securities, Evercore ISI, Guggenheim Securities, and LifeSci Capital managed the offering. They received a 30-day option to purchase up to 2.6 million additional shares. Lycia plans to use the proceeds to fund clinical trials of its drug candidates, according to the prospectus. Two are in phase I clinical trials, while a third is in preclinical development.

Lycia was founded in 2019 by Carolyn Bertozzi, who won the 2022 Nobel Prize in Chemistry. Its technology is based on research by Bertozzi and her team at Stanford University.

The researchers developed LYTACs, molecules that deliver selected proteins to lysosomes, the cell’s waste-disposal structures, to be broken down. One part of the molecule binds to a selected protein outside of a cell or on its surface, while another binds to a receptor that helps transport it into the cell. The protein is then broken down in a lysosome, a cellular structure containing enzymes. This approach allows targeted protein degradation, initially developed to break down proteins inside cells, to work on proteins outside of cells and on their surfaces as well.  

These extracellular and cell-surface proteins often play a key role in cancer, aging-related diseases, and autoimmune disorders, the researchers note. A YesPress profile of Lycia CEO Aetna Trombley describes the approach: one end of the molecule recognizes the selected protein, while the other engages a receptor that helps transport the complex into the cell. The complex is then carried to a lysosome, where the target protein can be broken down.

The idea attracted venture capital firm Versant Ventures, which cofounded Lycia and subsequently committed $50 million to it in 2020. Since then, the company has completed four funding rounds totaling $301.6 million.

In 2021, it entered into a drug development collaboration with Eli Lilly, under which the pharma giant paid it $35 million upfront and later another $2 million to extend the agreement. However, Eli Lilly terminated the agreement with the start-up, effective February 2026, according to the IPO filings. Lycia disclosed that no milestones were achieved over the course of the collaboration.

Lycia has funded its operations primarily through sales of convertible preferred stock, convertible notes, and payments from Eli Lilly, according to the prospectus. It has also received proceeds from common stock sales and stock option exercises. The Lilly payments were its only source of nondilutive capital. Lycia must now fund its operations independently, as HDIN Research points out. As of June 30, the start-up had $148.1 million in cash, cash equivalents, and marketable securities and an accumulated deficit of $136.8 million.

HDIN Research also highlights the biotech’s reliance on drug substances sourced from China, which creates risks of supply chain disruptions amid geopolitical tensions, and notes that some patent applications are still pending.

The main risk for Lycia is that its drug candidates fail to win approval or deliver weak study results, which could significantly affect the stock price, reckons Freedom analyst Alem Bektemirov. Freedom has set a target price of $19.60 per share, implying around 9% upside from the IPO price.

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Freedom clients can trade Lycia shares before the start of the main U.S. session. Premarket trading will open 2-3 hours early, at 15:30-16:30 Astana time. To start trading, select the symbol LYCA on the Freedom trading platform.