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.

Mer­ck is tak­ing the ax to its US op­er­a­tions, cut­ting 500 jobs in its lat­est re­or­ga­ni­za­tion

Merck is cutting 500 jobs in its US sales and headquarters commercial teams in its latest effort to find new ways to streamline the operation.

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Alice Shaw, Lung Cancer Foundation of America

Top ALK ex­pert and can­cer drug re­searcher Al­ice Shaw bids adieu to acad­e­mia, hel­lo to No­var­tis

Jay Bradner has recruited a marquee oncology drug researcher into the ranks of the Novartis Institutes for BioMedical Research. Alice Shaw is jumping from prestigious posts intertwined through Mass General, Harvard and Dana-Farber to take the lead of NIBR’s translational clinical oncology group.

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Mi­rati preps its first look at their KRAS G12C con­tender, and they have to clear a high bar for suc­cess

If you’re a big KRAS G12C fan, mark your calendars for October 28 at 4:20 pm EDT.

That’s when Mirati $MRTX will unveil its first peek at the early clinical data available on MRTX849 in presentations at the AACR-NCI-EORTC International Conference on Molecular Targets and Cancer Therapeutics in Boston.

Mirati has been experiencing the full effect of a rival’s initial success at targeting the G12C pocket found on KRAS, offering the biotech some support on the concept they’re after — and biotech fans a race to the top. Amgen made a big splash with its first positive snapshot on lung cancer, but deflated sky-high expectations as it proved harder to find similar benefits in other types of cancers.

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The FDA will hus­tle up an ex­pe­dit­ed re­view for As­traZeneca’s next shot at a block­buster can­cer drug fran­chise

AstraZeneca paid a hefty price to partner with Daiichi Sankyo on their experimental antibody drug conjugate for HER2 positive breast cancer. And they’ve been rewarded with a fast ride through the FDA, with a straight shot at creating another blockbuster oncology franchise.

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Sean Parker, AP

Sean Park­er helps cre­ate a CRISPRed cell ther­a­py 2.0 play — and he’s got a high-pro­file set of lead­ers on the team

You can rack up one more high-profile debut effort in the wave of activity forming around cell therapy 2.0. It’s another appealing Bay Area group that’s attracted some of the top hands in the business to a multi-year effort to create a breakthrough. And they have $85 million in hand to make that first big step to the clinic.

Today it’s Ken Drazan and the team at South San Francisco-based ArsenalBio that are coming from behind the curtain for a public bow, backed by billionaire Sean Parker and a collection of investors that includes Beth Seidenberg’s new venture investment operation based in LA.
Drazan — a J&J Innovation vet with a long record of entrepreneurial endeavors — exited the stage in 2018 when his last mission ended as he stepped aside as president of Grail. It wasn’t long, though, before he was helping out with a business plan for ArsenalBio that revolved around the work of a large group of interconnected scientists supported by the Parker Institute for Cancer Immunology.

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Med­ical an­i­ma­tion: Mak­ing it eas­i­er for the site and the pa­tient to un­der­stand

Medical animation has in recent years become an increasingly important tool for conveying niche information to a varied audience, particularly to those audiences without expertise in the specialist area. Science programmes today, for example, have moved from the piece-to-camera of the university professor explaining how a complex disease mechanism works, to actually showing the viewer first-hand what it might look like to shrink ourselves down to the size of an ant’s foot, and travel inside the human body to witness these processes in action. Effectively communicating a complex disease pathophysiology, or the novel mechanism of action of a new drug, can be complex. This is especially difficult when the audience domain knowledge is limited or non-existent. Medical animation can help with this communication challenge in several ways.
Improved accessibility to visualisation
Visualisation is a core component of our ability to understand a concept. Ask 10 people to visualise an apple, and each will come up with a slightly different image, some apples smaller than others, some more round, some with bites taken. Acceptable, you say, we can move on to the next part of the story. Now ask 10 people to visualise how HIV’s capsid protein gets arranged into the hexamers and pentamers that form the viral capsid that holds HIV’s genetic material. This request may pose a challenge even to someone with some virology knowledge, and it is that inability to effectively visualise what is going on that holds us back from fully understanding the rest of the story. So how does medical animation help us to overcome this visualisation challenge?

Hal Barron, GSK's president of R&D and CSO, speaks to Endpoints News founder and editor John Carroll in London at Endpoints' #UKBIO19 summit on October 8, 2019

[Video] Cel­e­brat­ing tri­al fail­ures, chang­ing the cul­ture and al­ly­ing with Cal­i­for­nia dream­ers: R&D chief Hal Bar­ron talks about a new era at GSK

Last week I had a chance to sit down with Hal Barron at Endpoints’ #UKBIO19 summit to discuss his views on R&D at GSK, a topic that has been central to his life since he took the top research post close to 2 years ago. During the conversation, Barron talked about changing the culture at GSK, a move that involves several new approaches — one of which involves celebrating their setbacks as they shift resources to the most promising programs in the pipeline. Barron also discussed his new alliances in the Bay Area — including his collaboration pact with Lyell, which we covered here — frankly assesses the pluses and minuses of the UK drug development scene, and talks about his plans for making GSK a much more effective drug developer.

This is one discussion you won’t want to miss. Insider and Enterprise subscribers can log-in to watch the video.

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Flu Virus (Source: CDC)

FDA ex­pands Xofluza ap­proval as Roche strug­gles to catch loom­ing flu mar­ket

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Xofluza (baloxavir marboxil) was approved last October in the US, the first landmark flu drug approval in 20 years and a much-needed green light for a company that had watched its leading flu drug Tamiflu get eaten alive by generics. Like its predecessor, the pill offered a reduction in flu symptoms but not a cure.

EMA backs sev­en ther­a­pies, in­clud­ing Mer­ck­'s Ebo­la vac­cine

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The drugmaker $MRK began developing the vaccine, christened Ervebo, during the West African outbreak that occurred between 2014 and 2016, killing more than 11,000.

The current outbreak in the Democratic Republic of Congo (DRC) has shown case fatality rates of approximately 67%, the agency estimated. Earlier this year, the WHO declared the outbreak — which so far has infected more than 3,000 people — a public health emergency of international concern.