IPOs, Venture

Third Rock-backed Allena looks to springboard a $92M IPO off of a failed PhIIb

The IPO market for biotech has turned hot. But is it hot enough to get Allena Pharmaceuticals into the public arena?

Three years ago, Allena Pharmaceuticals CEO Alexey Margolin was talking about using a $25 million B round to steer the Newton, MA-based biotech up to the threshold of Phase III. A year later, the $53 million C round was supposed to get it into the Phase III. And now, $96 million in, the team at Allena has crafted a $92 million IPO designed to fund Phase III — even though their drug just quietly failed a key and very small Phase IIb trial.

Alexey Margolin

Their lead drug is ALLN-177 for hyperoxaluria, a condition in which an excess level of oxalate is present in urine — a key building block for damaging kidney stones.

According to the S-1, their Study 713 failed to demonstrate a statistically significant “reduction in urinary oxalate excretion from baseline to Week 4 of the trial” for secondary hyperoxaluria. But the biotech claimed a success for some post-hoc analysis and a secondary endpoint: time-weighted average 24-hour urinary oxalate excretion. And that’s what they want the FDA to sign off on now as the primary endpoint for the pivotal study, focusing on more severe cases of enteric hyperoxaluria, which can be triggered by inflammatory bowel disease or surgery.

The secondary for enteric hyperoxuluria — which accounted for 18 of the 71 patients divided between the drug arms and the placebo group — also failed.

From the S-1:

•  In the overall population, reduction in 24 hour UOx excretion from baseline to Week 4 (the primary endpoint of the trial) was greater in subjects treated with ALLN-177 (LS mean(1) = —8.75 mg/24 hour) compared to subjects who received placebo (LS mean = —2.40 mg/24 hour); however, the difference between treatment groups (LS mean = —6.35 mg/24 hour) did not reach statistical significance (p(2) = 0.160).

•  In the subgroup with enteric hyperoxaluria, reduction in 24 hour UOx excretion from baseline to Week 4 was substantially greater in subjects treated with ALLN-177 (LS mean = —21.31 mg/24 hour) compared to subjects who received placebo (LS mean = —4.86 mg/24 hour), and the treatment difference was LS mean = —16.45 mg/24 hour (p = 0.184). The magnitude of the treatment effect was substantially greater than what was observed in the overall population.

Margolin and Bob Gallotto founded Allena in 2011 after selling Alnara and its lead drug — another oral enzyme therapy, for cystic fibrosis, called liprotamase — to Eli Lilly. Lilly then handed it off to Anthera $ANTH after an FDA panel panned the drug, which was quickly formally rejected. Then Anthera’s shares were crushed late last year after the drug failed a new Phase III, though company execs blamed the trial design on the setback.

Anthera has a market cap of $18 million as it pursues another pivotal study of the drug.

Gallotto left Allena two years ago.

While Allena touted early-stage positive results for their lead therapy, they never put out a release on the mid-stage failure. Now investors will get a chance to size it all up.

According to the SEC filing, Margolin owns 6.6% of the stock, with most of the rest divvied up among its venture backers: Primarily Frazier Healthcare, Third Rock, Bessemer, Fidelity and HBM.


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