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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