New norm? Three biotechs pen­cil in $100M IPOs

Three biotechs have tagged on­to an im­pres­sive streak of IPOs this year, pen­cil­ing in $100 mil­lion each for their pub­lic de­buts.

The S-1 from 4D Mol­e­c­u­lar Ther­a­peu­tics, Ca­balet­ta Bio and Phath­om Phar­ma — all filed Mon­day — rep­re­sent a spread in de­vel­op­ment stages, tech­nolo­gies as well as ther­a­peu­tic fo­cus. Roche-part­nered 4D Mol­e­c­u­lar Ther­a­peu­tics is look­ing to bring its gene ther­a­py pipeline to the clin­ic; Ca­balet­ta is putting a twist on the CAR-T cell ther­a­py ap­proach to tack­le au­toim­mune dis­eases and rais­ing cash for a Phase I tri­al; while Phath­om Phar­ma has some late-stage pro­grams for a GI as­set spun out from Take­da to run.

It al­so in­vites the ques­tion of whether biotechs are rush­ing for those big val­u­a­tions be­fore the wide-open biotech win­dow be­gins to nar­row.

The prospects of an elec­tion year might have al­so spurred ex­ecs to act quick­ly, ac­cord­ing to Jor­dan Saxe, Nas­daq’s head of health­care list­ings.

“If you’re look­ing at go­ing this year or next year, and you have the op­tion of this year, why not,” he told End­points News in a re­cent in­ter­view.

Be­low we un­pack the de­tails on each of the three IPOs — like­ly the be­gin­ning of more to come in Q4 as Saxe es­ti­mates about a dozen more ap­pli­ca­tions.

4D Mol­e­c­u­lar Ther­a­peu­tics

When they found­ed the Emeryville, CA-based biotech in 2013, David Kirn, David Schaf­fer and There­sa Janke set out to find bet­ter AAV — the vec­tors most com­mon­ly used to de­liv­er ther­a­peu­tic trans­genes in­to pa­tients for one-time cures. A re­search deal with Pfiz­er in 2016 aimed at car­diac dis­ease helped get the op­er­a­tions off the ground and a year lat­er Roche, which had teamed up with 4D Mol­e­c­u­lar Ther­a­peu­tics to study rare reti­nal dis­eases back in 2015, stepped up their oph­thal­mol­o­gy deal, li­cens­ing a choroi­deremia pro­gram. Soon af­ter As­traZeneca al­so inked an al­liance on chron­ic lung dis­ease.

None of the fi­nan­cial de­tails were dis­closed at the time; we now learn from the SEC fil­ing that they are all mi­nus­cule for the big play­ers. The up­front pay­ments from Pfiz­er and As­traZeneca are reg­is­tered at sin­gle-dig­it mil­lions. The deal ex­pan­sion with Roche did earn the biotech a lot more, rak­ing in $21 mil­lion up­front and $30 mil­lion for each ex­er­cise of op­tions. For the pro­gram in choroi­deremia, or night blind­ness, mile­stone pay­ments add up to $86 mil­lion.

The IPO pro­ceeds will fund their lead pro­grams for Fab­ry dis­ease and cys­tic fi­bro­sis, with a clin­i­cal tri­al planned for the sec­ond half of 2020. There are al­so plans to ad­vance oth­er pre­clin­i­cal ther­a­pies cov­er­ing a range of ail­ments, and op­ti­mize new can­di­dates for Duchenne mus­cu­lar dy­s­tro­phy as well as wet age-re­lat­ed mac­u­lar dy­s­tro­phy.

Man­u­fac­tur­ing is a key com­po­nent of any gene ther­a­py op­er­a­tion, and ex­ecs are eye­ing ex­pan­sion of their in-house ca­pa­bil­i­ties af­ter ini­ti­at­ing their first run ear­li­er this year.

All of that has cost $46.2 mil­lion. Viking Glob­al, which played a big role in the pre­vi­ous fi­nanc­ing to­tal­ing $108.6 mil­lion, holds 16.0% of the stock, on par with Kirn and Schaf­fer. Pfiz­er is in for 11.8% while Re­pleon claims 7.3%.

Ca­balet­ta Bio

The Penn spin­out has grabbed two rounds to­tal­ing $88 mil­lion in the past year, and it’s now seek­ing more for that big clin­i­cal push as well as in­ter­nal dis­cov­ery ef­forts. Helmed by se­r­i­al en­tre­pre­neur Steven Nicht­berg­er, Ca­balet­ta’s big idea is that CAARs — chimeric au­toan­ti­body re­cep­tors — can iden­ti­fy and elim­i­nate spe­cif­ic, path­o­gen­ic B cells while spar­ing healthy ones.

It marks a dif­fer­ent type of T cell en­gi­neer­ing than the kind that’s made a splash in can­cer, but they’ve got a deep bench of ex­per­tise to back it up. Michael Milone, who’s cred­it­ed for co-in­vent­ing Kym­ri­ah, is a co-founder along­side Nicht­berg­er and au­toim­mune/der­ma­tol­ogy re­searcher Aimee Payne.

5AM Ven­tures, Adage Cap­i­tal and Bak­er Bros came on board ear­ly, grab­bing around 19% of the stock each. The sci­en­tif­ic founders re­tained 6.5%, while Nicht­berg­er’s share is slight­ly high­er at 7.84%. Box­er Cap­i­tal and Deer­field are al­so stock­hold­ers.

Ca­balet­ta’s first ef­fort will be test­ing this ap­proach in mu­cos­al pem­phi­gus vul­garis, a rare skin dis­or­der char­ac­ter­ized by blis­ters. The FDA has giv­en the OK on the IND, and they ex­pect to be­gin a tri­al in 2020, re­serv­ing $30 mil­lion from the IPO for that pur­pose.

While B-cell me­di­at­ed dis­eases will re­main the fo­cus, Ca­balet­ta al­so sees po­ten­tial for their tech in oth­er less ob­vi­ous tar­gets such as he­mo­phil­ia. Ex­ecs are al­lo­cat­ing $45 mil­lion for those oth­er pro­grams.

Phath­om Phar­ma

It’s been a hec­tic week for Phath­om Phar­ma­ceu­ti­cals, which has large­ly stayed out of the spot­light since Take­da and Fra­zier cre­at­ed the ven­ture four months ago. On Fri­day the Buf­fa­lo Grove, IL-based com­pa­ny an­nounced that it’s wooed Ter­rie Cur­ran from Cel­gene to be­come its CEO;

Phath­om launched with $90 mil­lion in pri­vate fi­nanc­ing and a $50 mil­lion term loan fa­cil­i­ty. Ac­cord­ing to the S-1, the li­on’s share of the stock — 41.1% — went to Fra­zier, while Take­da kept 9.1% as well as rights to pro­mote its lead drug in Japan. David Socks, who will step away from the helm once Cur­ran ar­rives, holds 14.2% just like chair­man Tadata­ka Ya­ma­da.

In re­al­i­ty, though, Take­da has an even big­ger stake in the com­pa­ny. From a spokesper­son who fol­lowed up:

In ad­di­tion to the 9.1% eq­ui­ty own­er­ship, Take­da has ad­di­tion­al war­rants that bring its to­tal po­ten­tial own­er­ship to 40%. Af­ter fac­tor­ing in these war­rants, the Fra­zier own­er­ship is 22.5% and David Socks’ own­er­ship is 7.8%.

The plan is to com­plete Phase III tri­als for vono­prazan with cash from the IPO, both for ero­sive esophagi­tis and H. py­lori in­fec­tion. Al­ready ap­proved by Japan­ese reg­u­la­tors, the drug be­longs to a class that blocks the potas­si­um-bind­ing site of gas­tric hy­dro­gen potas­si­um AT­Pase (al­so known as the pro­ton pump), which is the en­zyme large­ly re­spon­si­ble for acid­i­fi­ca­tion of the stom­ach.

The FDA has des­ig­nat­ed vono­prazan as a qual­i­fied in­fec­tious dis­ease prod­uct, with all the ex­clu­siv­i­ty ben­e­fits and po­ten­tial pri­or­i­ty re­view that the QIDP sta­tus brings.

On pa­per Phath­om has al­ready burned through $90 mil­lion, but the spokesper­son clar­i­fied that the ma­jor­i­ty came from an R&D charge that ac­counts for stocks and war­rants giv­en to Take­da. The biotech ex­pects the new in­fu­sion to sus­tain it for an­oth­er two years.

De­vel­op­ment of the Next Gen­er­a­tion NKG2D CAR T-cell Man­u­fac­tur­ing Process

Celyad’s view on developing and delivering a CAR T-cell therapy with multi-tumor specificity combined with cell manufacturing success
Transitioning potential therapeutic assets from academia into the commercial environment is an exercise that is largely underappreciated by stakeholders, except for drug developers themselves. The promise of preclinical or early clinical results drives enthusiasm, but the pragmatic delivery of a therapy outside of small, local testing is most often a major challenge for drug developers especially, including among other things, the manufacturing challenges that surround the production of just-in-time and personalized autologous cell therapy products.

Paul Hudson, Getty Images

UP­DAT­ED: Sanofi CEO Hud­son lays out new R&D fo­cus — chop­ping di­a­betes, car­dio and slash­ing $2B-plus costs in sur­gi­cal dis­sec­tion

Earlier on Monday, new Sanofi CEO Paul Hudson baited the hook on his upcoming strategy presentation Tuesday with a tell-tale deal to buy Synthorx for $2.5 billion. That fits squarely with hints that he’s pointing the company to a bigger future in oncology, which also squares with a major industry tilt.

In a big reveal later in the day, though, Hudson offered a slate of stunners on his plans to surgically dissect and reassemble the portfoloio, saying that the company is dropping cardio and diabetes research — which covers two of its biggest franchise arenas. Sanofi missed the boat on developing new diabetes drugs, and now it’s pulling out entirely. As part of the pullback, it’s dropping efpeglenatide, their once-weekly GLP-1 injection for diabetes.

“To be out of cardiovascular and diabetes is not easy for a company like ours with an incredibly proud history,” Hudson said on a call with reporters, according to the Wall Street Journal. “As tough a choice as that is, we’re making that choice.”

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Roger Perlmutter, Merck

#ASH19: Here’s why Mer­ck is pay­ing $2.7B to­day to grab Ar­Qule and its next-gen BTK drug, lin­ing up Eli Lil­ly ri­val­ry

Just a few months after making a splash at the European Hematology Association scientific confab with an early snapshot of positive data for their BTK inhibitor ARQ 531, ArQule has won a $2.7 billion buyout deal from Merck.

Merck is scooping up a next-gen BTK drug — which is making a splash at ASH today — from ArQule in an M&A pact set at $20 a share $ARQL. That’s more than twice Friday’s $9.66 close. And Merck R&D chief Roger Perlmutter heralded a deal that nets “multiple clinical-stage oral kinase inhibitors.”

This is the second biotech buyout pact today, marking a brisk tempo of M&A deals in the lead-up to the big JP Morgan gathering in mid-January. It’s no surprise the acquisitions are both for cancer drugs, where Sanofi will try to make its mark while Merck beefs up a stellar oncology franchise. And bolt-ons are all the rage at the major pharma players, which you could also see in Novartis’ recent $9.7 billion MedCo buyout.

ArQule — which comes out on top after their original lead drug foundered in Phase III — highlighted early data on ‘531 at EHA from a group of 6 chronic lymphocytic leukemia patients who got the 65 mg dose. Four of them experienced a partial response — a big advance for a company that failed with earlier attempts.

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Paul Hudson, Sanofi

Paul Hud­son promis­es a bright new fu­ture at Sanofi, kick­ing loose me-too drugs and fo­cus­ing on land­mark ad­vances. But can he de­liv­er?

Paul Hudson was on a mission Tuesday morning as he stood up to address Sanofi’s new R&D and business strategy.

Still fresh into the job, the new CEO set out to convince his audience — including the legions of nervous staffers inevitably devoting much of their day to listening in — that the pharma giant is shedding the layers of bureaucracy that had held them back from making progress in the past, dropping the duds in the pipeline and reprioritizing a more narrow set of experimental drugs that were promised as first-in-class or best-in-class.  The company, he added, is now positioned to “go after other opportunities” that could offer a transformational approach to treating its core diseases.

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Am­gen puts its foot down in shiny new South San Fran­cis­co hub as it re­or­ga­nizes R&D ops

Amgen has signed up to be AbbVie’s neighbor in South San Francisco as it moves into a nine-story R&D facility in the booming biotech hub.

The arrangement gives Amgen 240,000 square feet of space on the Gateway of Pacific Campus, just a few minutes drive from its current digs at Oyster Point. The new hub will open in 2022 and house the big biotech’s Bay Area employees working on cardiometabolic, inflammation and oncology research.

Ab­b­Vie, Scripps ex­pand part­ner­ship, for­ti­fy fo­cus on can­cer drugs

Scripps and AbbVie go way back. Research conducted in the lab of Scripps scientist Richard Lerner led to the discovery of Humira. The antibody, approved by the FDA in 2002 and sold by AbbVie, went on to become the world’s bestselling treatment. In 2018, the drugmaker and the non-profit organization signed a pact focused on developing cancer treatments — and now, the scope of that partnership has broadened to encompass a range of diseases, including immunological and neurological conditions.

South Ko­rea jails 3 Sam­sung ex­ecs for de­stroy­ing ev­i­dence in Bi­o­Log­ics probe

Three Samsung executives in Korea are going to jail.

The convictions came in what prosecutors had billed as “biggest crime of evidence destruction in the history of South Korea”: a case of alleged corporate intrigue that was thrown open when investigators found what was hidden beneath the floor of a Samsung BioLogics plant. Eight employees in total were found guilty of evidence tampering and the three executives were each sentenced to up to two years in prison.

Nick Plugis, Avak Kahvejian, Cristina Rondinone, Milind Kamkolkar and Chad Nusbaum. (Cellarity)

Cel­lar­i­ty, Flag­ship's $50M bet on net­work bi­ol­o­gy, mar­ries ma­chine learn­ing and sin­gle-cell tech for drug dis­cov­ery

Cellarity started with a simple — but far from easy — idea that Avak Kahvejian and his team were floating around at Flagship Pioneering: to digitally encode a cell.

As he and his senior associate Nick Plugis dug deeper into the concept, they found that most of the models others have developed take a bottom-up approach, where they assemble the molecules inside cells and the connections between them from scratch. What if they opt for a top-down approach, aided by single-cell transcriptomics and machine learning, to gauge the behavior of the entire cellular network?

Sanofi’s big week in­cludes a promis­ing PhI­II for an or­phan dis­ease drug, with plans for a pitch to the FDA

The biopharma R&D food chain is paying off with a plan at Sanofi to pitch regulators on a new drug for an orphan disease called cold agglutinin disease.

The pharma giant ushered out a statement Tuesday morning — after it spelled out plans to radically restructure the company, abandoning cardio and diabetes research altogether — saying that their C1s inhibitor sutimlimab had cleared the pivotal study.