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.

Tesla and SpaceX founder Elon Musk gestures to the audience after being recognized by President Trump following the successful launch of a Falcon 9 rocket at the Kennedy Space Center. (via Getty Images)

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In a late-night tweet Wednesday, the Tesla chief announced:

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Elias Zerhouni (Photo by Vincent Isore/IP3/Getty Images)

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Rather than interpret them, I thought it would be best to provide snippets straight from the interview.

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