Fresh from $94.5M crossover round, Fra­zier-groomed der­ma­tol­ogy biotech shoots for $100M IPO

Back in Oc­to­ber, when Fra­zier Health­care Part­ners took the wraps off their lat­est der­ma­tol­ogy play, few had heard of Ar­cutis Ther­a­peu­tics. But ex­ecs are quick­ly chang­ing that, fol­low­ing up a $94.5 mil­lion Se­ries C crossover round with a pitch for $100 mil­lion in IPO cash.

Frank Watan­abe

It is per­haps fit­ting for Ar­cutis to claim the sec­ond S-1 fil­ing of the decade. The biotech isn’t do­ing any­thing ground­break­ing, per se; rather, the idea is to de­liv­er top­i­cal for­mu­la­tions of known drugs — from well-es­tab­lished drug class­es — there­by plug­ging a gap be­tween in­ef­fec­tive top­i­cal treat­ments and ex­pen­sive in­jecta­bles.

By the time they ap­pear on the Nas­daq as $AR­QT, the hope is that their twin Phase III tri­als in plaque pso­ri­a­sis for the lead drug will be well un­der­way.

The four drug can­di­dates, span­ning sev­en clin­i­cal pro­grams, in Ar­cutis’ pipeline stem from two com­pounds it has in-li­censed. The ac­tive in­gre­di­ent in both ARQ-151 cream and ARQ-154 foam is rof­lu­mi­last, a PDE4 in­hibitor that As­traZeneca mar­kets for chron­ic ob­struc­tive pul­monary dis­ease in oral form. Hen­grui pro­vid­ed the JAK1 in­hibitor that Ar­cutis is turn­ing in­to ARQ-252 (cream) and ARQ-255 (sus­pen­sion).

Ar­cutis got rights to rof­lu­mi­last on the cheap, the fil­ing re­vealed: up­front of $1 mil­lion and $3 mil­lion in Se­ries B stock. Clin­i­cal, reg­u­la­to­ry and sales mile­stones add up to less than $30 mil­lion, $2 mil­lion of which has been paid. The Hen­grui JAK1 in­hibitor (orig­i­nal­ly dubbed SHR0302) cost Ar­cutis $1.9 mil­lion to­tal up­front, with over $220 mil­lion in mile­stones tagged to a deal that cov­ers the US, Cana­da, Japan and the EU.

John Smither

In ad­di­tion to tar­get­ing pso­ri­a­sis and atopic der­mati­tis with ARQ-151 and se­b­or­rhe­ic der­mati­tis and scalp pso­ri­a­sis with ARQ-154, Ar­cutis has al­so en­list­ed Hawk­eye Ther­a­peu­tics to de­vel­op more ap­pli­ca­tions of rof­lu­mi­last. As part of the deal, it pur­chased around 20% of its part­ners’ shares at the time.

Giv­en the mass-mar­ket in­di­ca­tions that they are eye­ing — which al­so in­clude hand eczema, vi­tili­go and alope­cia area­ta — Ar­cutis is keen­ly aware of block­buster, gener­ic and ex­per­i­men­tal ri­vals, from Hu­mi­ra and Ote­zla to Clobex and cor­ti­cos­teroids. But it still be­lieves it can carve out a niche, par­tic­u­lar­ly in pa­tients with mild to mod­er­ate dis­eases.

“The bi­o­log­ics ac­count for some­thing like 80% of the to­tal mar­ket size of pso­ri­a­sis but it’s on­ly some­thing like 6% of the pa­tients,” CFO John Smither pre­vi­ous­ly told End­points News. “We’re try­ing to solve a dif­fer­ent thing by ac­tu­al­ly treat­ing more pa­tients at a more cost-ef­fec­tive price” — a sweet spot where pa­tients won’t need physi­cian ap­proval to get re­im­burse­ment.

Bhaskar Chaud­huri

Smither owns 1.1% of the stock, while CEO Frank Watan­abe — an Am­gen vet in­volved in the mar­ket­ing of En­brel — holds 4.1%. Watan­abe’s com­pen­sa­tion pack­age for 2019 came in at $970,546.

But Fra­zier, led by Bhaskar Chaud­huri, re­mains the largest share­hold­er, hav­ing start­ed the com­pa­ny around three years ago, at 36.9%. Bain Cap­i­tal and Or­biMed, which were brought in dur­ing Se­ries B, claim 13.5% and 15.1%, re­spec­tive­ly.

Fangliang Zhang, AP Images

UP­DAT­ED: Leg­end fetch­es $424 mil­lion, emerges as biggest win­ner yet in pan­dem­ic IPO boom as shares soar

Amid a flurry of splashy pandemic IPOs, a J&J-partnered Chinese biotech has emerged with one of the largest public raises in biotech history.

Legend Biotech, the Nanjing-based CAR-T developer, has raised $424 million on NASDAQ. The biotech had originally filed for a still-hefty $350 million, based on a range of $18-$20, but managed to fetch $23 per share, allowing them to well-eclipse the massive raises from companies like Allogene, Juno, Galapagos, though they’ll still fall a few dollars short of Moderna’s record-setting $600 million raise from 2018.

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Is a pow­er­house Mer­ck team prepar­ing to leap past Roche — and leave Gilead and Bris­tol My­ers be­hind — in the race to TIG­IT dom­i­na­tion?

Roche caused quite a stir at ASCO with its first look at some positive — but not so impressive — data for their combination of Tecentriq with their anti-TIGIT drug tiragolumab. But some analysts believe that Merck is positioned to make a bid — soon — for the lead in the race to a second-wave combo immuno-oncology approach with its own ambitious early-stage program tied to a dominant Keytruda.

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As it hap­pened: A bid­ding war for an an­tibi­ot­ic mak­er in a mar­ket that has rav­aged its peers

In a bewildering twist to the long-suffering market for antibiotics — there has actually been a bidding war for an antibiotic company: Tetraphase.

It all started back in March, when the maker of Xerava (an FDA approved therapy for complicated intra-abdominal infections) said it had received an offer from AcelRx for an all-stock deal valued at $14.4 million.

The offer was well-timed. Xerava was approved in 2018, four years after Tetraphase posted its first batch of pivotal trial data, and sales were nowhere near where they needed to be in order for the company to keep its head above water.

Drug man­u­fac­tur­ing gi­ant Lon­za taps Roche/phar­ma ‘rein­ven­tion’ vet as its new CEO

Lonza chairman Albert Baehny took his time headhunting a new CEO for the company, making it absolutely clear he wanted a Big Pharma or biotech CEO with a good long track record in the business for the top spot. In the end, he went with the gold standard, turning to Roche’s ranks to recruit Pierre-Alain Ruffieux for the job.

Ruffieux, a member of the pharma leadership team at Roche, spent close to 5 years at the company. But like a small army of manufacturing execs, he gained much of his experience at the other Big Pharma in Basel, remaining at Novartis for 12 years before expanding his horizons.

Covid-19 roundup: Ab­b­Vie jumps in­to Covid-19 an­ti­body hunt; As­traZeneca shoots for 2B dos­es of Ox­ford vac­cine — with $750M from CEPI, Gavi

Another Big Pharma is entering the Covid-19 antibody hunt.

AbbVie has announced a collaboration with the Netherlands’ Utrecht University and Erasmus Medical Center and the Chinese-Dutch biotech Harbour Biomed to develop a neutralizing antibody that can treat Covid-19. The antibody, called 47D11, was discovered by AbbVie’s three partners, and AbbVie will support early preclinical work, while preparing for later preclinical and clinical development. Researchers described the antibody in Nature Communications last month.

Pfiz­er’s Doug Gior­dano has $500M — and some ad­vice — to of­fer a cer­tain breed of 'break­through' biotech

So let’s say you’re running a cutting-edge, clinical-stage biotech, probably public, but not necessarily so, which could see some big advantages teaming up with some marquee researchers, picking up say $50 million to $75 million dollars in a non-threatening minority equity investment that could take you to the next level.

Doug Giordano might have some thoughts on how that could work out.

The SVP of business development at the pharma giant has helped forge a new fund called the Pfizer Breakthrough Growth Initiative. And he has $500 million of Pfizer’s money to put behind 7 to 10 — or so — biotech stocks that fit that general description.

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Bris­tol My­ers is clean­ing up the post-Cel­gene merg­er pipeline, and they’re sweep­ing out an ex­per­i­men­tal check­point in the process

Back during the lead up to the $74 billion buyout of Celgene, the big biotech’s leadership did a little housecleaning with a major pact it had forged with Jounce. Out went the $2.6 billion deal and a collaboration on ICOS and PD-1.

Celgene, though, also added a $530 million deal — $50 million up front — to get the worldwide rights to JTX-8064, a drug that targets the LILRB2 receptor on macrophages.

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Mer­ck wins a third FDA nod for an­tibi­ot­ic; Mereo tack­les TIG­IT with $70M raise in hand

Merck — one of the last big pharma bastions in the beleaguered field of antibiotic drug development — on Friday said the FDA had signed off on using its combination drug, Recarbrio, with hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia. The drug could come handy for use in hospitalized patients who are afflicted with Covid-19, who carry a higher risk of contracting secondary bacterial infections. Once SARS-CoV-2, the virus behind Covid-19, infects the airways, it engages the immune system, giving other pathogens free rein to pillage and plunder as they please — the issue is particularly pertinent in patients on ventilators, which in any case are breeding grounds for infectious bacteria.

RA Cap­i­tal, Hill­house join $310M rush to back Ever­est's climb to com­mer­cial heights in Chi­na

Money has never been an issue for Everest Medicines. With an essentially open tab from their founders at C-Bridge Capital, the biotech has gone two and a half years racking up drug after drug, bringing in top exec after top exec, and issuing clinical update after update.

But now other investors want in — and they’re betting big.

Everest is closing its Series C at $310 million. The first $50 million comes from the Jiashan National Economic and Technological Development Zone; the remaining C-2 tranche was led by Janchor Partners, with RA Capital Management and Hillhouse Capital as co-leaders. Decheng Capital, GT Fund, Janus Henderson Investors, Rock Springs Capital, Octagon Investments all joined.