The biotech space has been a rough environment in which to pull off an initial public offering this year. A host of companies have ditched their offerings last minute, with Bavarian Nordic (CO:BAVA), the Novartis AG (NYSE:NVS) backed GenSight and Viamet Pharmaceuticals Holdings LLC (NASDAQ:VMET) just three examples among many. A few companies, however, have forged forward with their IPOs, and look to have done relatively well given current conditions. Here are three of the highest profile, and a look at what each is working on.
Intellia Therapeutics Inc (NASDAQ:NTLA)
Intellia announced the closing of its IPO on May 11. The company raised net proceeds of circa $113 million, and now lists on the NASDAQ. Intellia is a gene therapy biotech, with a specific focus on the development of treatments based on what’s called CRISPR/CAS9 technology. The technology, which one of the company’s two founders developed, is a gene editing tool. Since the genome project completed back at the turn of the century, biotech companies have been trying to develop a gene editing tool that can harness a cell’s natural repair mechanism to insert or remove elements of DNA (the process that underpins gene editing). Until CRISPR/CAS9, this was not possible. Now, using the technology that Intellia owns, it is. The technology allows the company to undertake three specific types of editing – knockout, repair and insertion. The names here are pretty self explanatory – knockout is used to remove genes that create harmful proteins, repair is used to fix the same sorts of genes, insertion is used to add a functional gene to produce a protein that is lacking.
With these three edit types, the scope of potential target indications is huge, and therein lies Intellia’s strategy. The company is conducting a broad development program that sees it target liver disease, certain oncological indications and HBV. The latter of these three, the hepatitis indication, is a partnership with Regeneron Pharmaceuticals Inc (NASDAQ:REGN), and is where the lion’s share of the $113 million IPO capital will allocate.
Aeglea Bio Therapeutics Inc (NASDAQ:AGLE)
Aeglea closed out on its IPO mid April, having raised net proceeds of a little over $47 million. The company develops engineered human enzymes, which it then uses to target specific amino acids in a range of indications. Its lead candidate, AEB1102, just picked up fast track designation from the Food and Drug Administration (FDA) in the US, in an arginase deficiency indication. In patients with an arginase deficiency, arginine doesn’t get broken down into urea. This causes a buildup of both the already mentioned arginine, and ammonia, in the body. This buildup leads to crippling muscle stiffness, and spasticity, and currently has no direct approved therapy (the currently available SOCs only target the symptoms, not the underlying condition).
Aeglea’s AEB1102 aims to catalyze the otherwise underactive hydrolysis of (the breaking down of) arginine, and in doing so, inhibit the accumulation of excess ammonia and arginine in the patient.
It’s still early days. The company is seeking to kick off human trials before the end of this year, funded with the IPO raised capital. The fast track designation should speed up any post trial reviews, but it wont speed up the trials themselves, so chances are it will be late 2018-early 2019 before the company gets anywhere near a pivotal in this indication. This doesn’t mean there aren’t any milestones to watch, of course. The nature of a fast track designation suggests we will get regular updates from any ongoing trial (in this instance, the upcoming phase I) as the company rolls out submissions to the FDA. Each of these updates have the potential to serve as upside catalysts, meaning Aeglea could be a rewarding allocation across the next 24 months if its data hints at efficacy.
PhaseRx Inc (NASDAQ:PZRX)
Finally, PhaseRX. This company closed out its IPO on May 18, having raised $18.5 million via the sale of 3.7 million shares at $5 a share. The company initially sought a $7 price, but the tough environment alluded to in the introduction to this piece led to a discounted IPO, and slightly lower than targeted net proceeds as a result. This is not necessarily a bad thing. The company has to-date funded its operations through capital infusions from the likes of Arch Venture Partners, a global biotech and healthcare fund that has supported now billion dollar biotech names including Agios Pharm (NASDAQ:AGIO), Bluebird bio Inc (NASDAQ:BLUE) and Array BioPharma Inc (NASDAQ:ARRY). That it’s IPO came in under target, therefore, looks more of a symptom of wider market sentiment (specifically, a risk off capital environment) than indicative of its potential. In turn, at its current open market price – a little over its $5 IPO price – investors can pick up what could be an undervalued exposure to the company’s future growth. PhaseRX is targeting what are called urea cycle disorders. Coincidentally, this is a similar indication arena to that of the above mentioned Aeglea. The urea cycle is the cycle through which enzymes in the blood stream break down nitrogen, and remove ammonia from the body. In patients with urea cycle disorders, one or more of these enzymes is dysfunctional (or missing completely) and this leads to the inefficient removal of urea. Inefficiency in the removal of urea leads to a host of conditions, and the one that PhaseRX is targeting as a primary indication is called ornithine transcarbamylase deficiency (OTD). OTD is an inherited disorder that, as its name suggests, is caused by a lack of ornithine transcarbamylase, which is an enzyme (one of six) that breaks down nitrogen. This lack causes ammonia to build up in the blood, and leads to a host of symptoms ranging from the pretty mild (headache, nausea) to the severe (liver failure). With its lead candidate, ORX-OTC, PhaseRX is hoping to deliver functional versions of the deficient enzyme through enzyme replacement therapy (ERT). ERT, at least, this specific type of ERT, uses a therapeutic mRNA which embeds itself in liver cells, which in turn go on to produce the enzyme in question.
Again, it’s early in the development process. Of course, this is far from unusual in the biotech IPO space – most IPOs in the sector are targeted at raising capital to carry preclinical candidates into human trials. If PhaseRX (backed by the above mentioned Arch) can demonstrate early stage efficacy in its ERT pipeline, it could make for a rewarding allocation going forward.
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