IPOs

In an end-of-year IPO blitz, 4 biotechs pitch new offerings totaling $370M

An immuno-oncology company focused on a more potent T cell attack. Two biotechs that grabbed assets off the remaindered shelves at Big Pharma. And one gene therapy upstart looking to cure Duchenne muscular dystrophy, one of the most controversial fields in biopharma R&D.

Altogether, the group of 4 mounted a last minute wave of IPO filings during the waning hours of 2017. And if they come even close to raising the $370 million pencilled in for their S-1s we’ll have a good idea whether the venture-backed brigade of private biotechs can continue a solid run that sparked up the second half of last year.

Or not.

The pharma assets were obtained for little or no cash down, asking investors to pay for the research that will be needed to prove whether they are actually new drugs in the making. Duchenne muscular dystrophy has been both a mine field and a treasure map. And immuno-oncology represents one of the most intensely competitive fields in drug R&D today.

So in case you were asking, there are no sure things in biotech. Here’s the breakdown.

Armo Bio sets the stage for a pivotal I/O pitch with $86M IPO

Peter Van Vlasselaer

Company: Armo BioSciences
Initial IPO target: $86 million
CEO + stake: Peter Van Vlasselaer (8.1%)
Founded: 2012
Based: Redwood City, CA

Armo BioSciences’ $67 million mezzanine round at the end of last August set the stage for this $86 million IPO.

Celgene and Google’s GV came back alongside Kleiner Perkins and OrbiMed as well as a broader syndicate including China’s Qiming Venture Partners for the C round backing a new technology aimed at whipping up a more potent CD8-positive T cell attack on cancer cells — ground zero in the current onslaught of cancer R&D programs.

Armo is following what has become a well traveled pathway in cancer drug development, pivoting from early stage to late-stage studies. And it’s selling the potential of a lead therapy that has garnered some positive results in a handful of patients. The key pitch in the S-1:

The combination with AM0010 and FOLFOX showed in PDAC (pancreatic ductal adenocarcinoma) patients with a median number of two prior therapies, a mPFS of 2.6 months. The mOS for the combination of AM0010 and FOLFOX is 10.2 months with a median follow-up time of 20.3 months with a range between 15.8 and 25.9 months as of October 2017. At that time, the one year survival rate was 42.9%. These results are of particular interest compared to a mOS of 4.3 months, mPFS of 1.7 months and one-year survival of 18.5% reported in a study of FOLFOX in the second-line setting.

The first interim analysis of the Phase III is due in “early 2018,” with a 2020 readout on the second interim analysis that could trigger a marketing application. There’s also a program for non-small cell lung cancer.

Kleiner Perkins controls about 20% of the shares now, trailed by OrbiMed at 19% and DAG Ventures at 11%. GV is in for 5.6% of the equity. The stock will be listed under the symbol $ARMO.


Another drug off of Novartis’ back shelf triggers a quickie $85M IPO from PureTech

Chen Schor

Company: resTORbio
Initial IPO target: $85 million
CEO + stake: Chen Schor (8.8%)
Founded: 2017
Based: Cambridge, MA

Nine months after PureTech ramped up a new company called resTORbio and then picked up a pair of drugs from Novartis’ outlicensing shelf, the biotech has given birth to an $85 million IPO pitch.

ResTORbio’s fortunes will rest on mTORC1 inhibitors with a potential to treat a variety of aging-related ailments, started with respiratory tract infections for the elderly. A Phase IIb study covering the southern and northern hemispheres is expected to read out in the second half of this year.

Novartis let go of resTORbio’s lead drug — RTB101 — for a batch of stock for NIBR accounting for 9.4% of the shares, with no money down. A successful development program could trigger up to $24 million in milestones with royalties due on any sales, and the biotech has so far fronted a token $300,000 for their progress to date.

PureTech, which is run by Daphne Zohar, owns 44.4% of the company with another 20% held by OrbiMed.

PureTech exec and resTORbio’s CEO Chen Schor holds 8.8% of the stock, which will be listed as $TORC.


Can Menlo’s $1M drug deal with Merck inspire a $98M IPO to pay for Phase III?

Steven Basta

Company: Menlo Therapeutics
Initial IPO target: $98 million
CEO + stake: Steven Basta (3.7%)
Founded: 2011 (as Tigercat)
Based: Redwood City, CA

Can a low-profile biotech with a single asset picked up for $1 million upfront paid to Merck pull off a $98 million IPO in early 2018?

Redwood City, CA-based Menlo Therapeutics intends to find out.

The biotech, which had $75 million in cash in the bank at the end of September, has completed a successful Phase II for pruritus. The group that founded the company picked up serlopitant back in 2012 for what amounts to lunch money in this business, bagging rights to a drug (MK0594) that Merck had put through a couple of trials for alcohol dependence (terminated) and overactive bladder.

The drug is an NK-1 receptor antagonist, which the biotech’s execs believe is a key mediator to the urge to scratch or cough. Tamp that down and Menlo believes its drug can help people with a variety of ailments tied to pruritus as well as chronic coughing. And once it goes into Phase III, Menlo says it will owe Merck another $3 million along with up to $25 million in development and regulatory milestones with another $50 million in goal cash built on top of that — provided they can steer it to the market.

The S-1 pitch is essentially based on data from two Phase II studies that were reported out last September. Investigators reported a borderline success (p<0.05) on the reduction from baseline VAS pruritus score and a change from baseline in average-itch VAS score at 8 weeks (p<0.001).

Vivo Capital is the big shareholder, with 25% of the equity. Remeditex Ventures weighs in at 18% and Presidio Partners controls 16.5% of the stock.

Bagging discards off Big Pharma’s back shelves — or their rejects — has become a popular, though not necessarily successful, strategy. Vivek Ramaswamy is building a multifaceted enterprise using that approach, though his first foray out with Axovant ran into a brick wall of failure.

Menlo plans to trade as $MNLO.


Can a gene therapy upstart focused on a controversial target like Duchenne MD win over investors to the tune of $100M?

Ilan Ganot

Company: Solid BioSciences
Initial IPO target: $100 million
CEO + stake: Ilan Ganot (N/A)
Founded: 2013
Based: Cambridge, MA

It was clear at the end of Q1 last year that Solid’s $50 million round was aiming at a crossover to the public markets, and the biotech did not disappoint, posting its $100 million IPO on the last business day of the year.

Founded by Duchenne dad Ilan Ganot, the company has gained the support of RA Capital and its close confederates at Bain for a gene therapy aimed at nothing less than a cure of DMD. By introducing a synthetic dystrophin transgene construct, called microdystrophin, via a viral vector, the company hopes to prove it can do what Sarepta and others have been groping for with one decisive intervention.

The fact that not everyone in the field — including some at the FDA — is convinced that dystrophin is the right biomarker for addressing this disease, there’s obviously a long way to go in proving it works.

The S-1 lists the investors, but doesn’t spell out what percentages of the equity they own — a missing feature which will need to be patched in.

The biotech plans to list as $SLDB.


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