Finance Watch: Vaccinex, Aridis Launch August's First US IPOs As The Summer Simmer Slows

The summer slowdown finally seems to have hit the US biopharma IPO market; after a hot July with nine offerings, there were just two during the first half of August. Also, Zogenix leads recent follow-ons with a $312m offering; venture capital planted in UK biotechs – Orchard and Blueberry.

Vaccinex Inc. and Aridis Pharmaceuticals Inc. were the first and second drug developers to launch initial public offerings in the US during the first half of August. And since the warm month is lagging a hot July, it appears that a summer cool-off may finally have set in for the biopharmaceutical IPO market.

There were nine biopharma IPOs in July, bringing this year's total to 45 first-time offerings in the US. But the 46^th and 47^th offerings also are some of 2018's smaller IPOs, with Vaccinex grossing $40m from the sale of 3.33m shares at $12 each on Aug. 9, though the proceeds could increase to $46m with the sale of 500,000 shares set aside for overallotments to meet excess investor demand.

Rochester, N.Y.-based Vaccinex is developing immunotherapies to treat cancer, neurodegenerative diseases and autoimmune disorders. The company will use the cash to repay debt and for general corporate expenses, but most of the money will fund ongoing drug development programs.

Vaccinex has set aside $25m through 2019 for development of VX15, which inhibits semaphorin 4D (SEM4D), in the treatment of Huntington's disease – one of multiple mid-stage Huntington's drug development programs under way in a challenging disease setting. (Also see "Laquinimod Disappoints Again, This Time In Huntington's Disease" - Scrip, 31 Jul, 2018.)

The company also has four early clinical studies planned or underway for VX15 in various solid tumors, including an ongoing Phase Ib/II study testing the antibody drug in combination with the Merck KGAA/Pfizer Inc. PD-L1 inhibitor Bavencio (avelumab) in advanced non-small cell lung cancer; $5m has been earmarked for this study.

San Jose-based Aridis is developing targeted immunotherapies to treat life-threatening infections via monoclonal antibodies. Lead candidate AR-301 is an antibody targeting Staphylococcus aureus alpha toxin that will move into Phase III for hospital-acquired or ventilator-acquired pneumonia after the company's IPO. Aridis sold 2m shares at $13 each (versus a $13-$15 proposed range) for $26m in gross proceeds before overallotments on Aug. 13.

The latest drug developer to join the US IPO queue is Eton Pharmaceuticals Inc. of Deer Park, Ill., which was spun out of Imprimis Pharmaceuticals Inc. with $20m in 2017 to develop drugs and nutritional products based on existing compounds via the US FDA's 505(b)2 approval pathway. (Also see "Finance Watch: Cash Flows Into Public Biopharmas, Including IPOs; Atlas Raises $350m VC Fund" - Scrip, 6 Jul, 2017.)

Zogenix Raises $312m To Pursue ZX008 Approval

Zogenix Inc. didn't rush to market with an offering immediately after reporting positive Phase III results in July for ZX008 in the rare epilepsy Dravet syndrome, but the Emeryville, Calif.-based company did price an offering of 6m shares at $52 each on Aug. 7 to gross $312m. (Also see "Zogenix' ZX008 Emerges As Strong Contender In Rare Epilepsy" - Scrip, 12 Jul, 2018.)

The proceeds – and anything raised from the sale of overallotments – will fund regulatory submissions and commercial infrastructure for ZX008 in its first indication and Phase III development for the drug in another seizure disorder, Lennox-Gastaut syndrome, among other expenses.

Rockville, Md.-based gene therapy developer REGENXBIO Inc. went to market with a large follow-on offering (FOPO) much faster after reporting interim Phase I results on Aug. 8 from Phase I/II studies for its lead development programs – RGX-314 for wet age-related macular degeneration (AMD) and RGX-501 for homozygous familial hypercholesterolemia.

RGX-314 has shown positive efficacy in wet AMD and will continue toward Phase II, while REGENXBIO is seeking a protocol amendment for the RGX-501 clinical program to address both safety and efficacy. The company closed an offering of 3.1m shares at $65 each on Aug. 10 to gross $201.8m, including overallotments, for the ongoing development of those and other gene therapies.

Among other recent public company financings:

• The publicly traded Canadian firm Highland Therapeutics Inc.'s wholly-owned subsidiary Ironshore Pharmaceuticals & Development Inc. – a private firm headquartered in George Town, Cayman Islands – said on Aug. 14 that it entered into agreements with multiple investors to raise $143m from the sale of senior secured notes via a Morgan Stanley & Co. LLC-brokered private placement. Ironshore, which was set up by Highland to use the proprietary Delexis technology to improve the delivery of approved drugs, obtained US FDA approval in August for the once-daily stimulant Jornay PM in the treatment of attention deficit hyperactivity disorder (ADHD). The product is a reformulation of methylphenidate and the first ADHD drug approved for once-daily nighttime dosing. (Also see "Keeping Track: Poteligeo, Onpattro, Galafold And Annovera Approved; Selinexor Submitted" - Pink Sheet, 12 Aug, 2018.) Proceeds from the recent private placement and from the sale of $200m worth of notes sold in January 2017 will be used to commercialize Jornay PM, which Ironshore intends to launch during the first half of 2019.

• Progenics Pharmaceuticals Inc., whose radiopharmaceutical Azedra (iobenguane I 131) was approved at the end of July for the treatment of neuroendocrine tumors, sold 9.09m shares for $8.25 each on Aug. 7 to gross $75m before overallotments. (Also see "14 Approvals To Look Out For In Q3" - Scrip, 10 Jul, 2018.) The New York-based company will use the proceeds for research and development, business development and other general corporate purposes.

• Spring Bank Pharmaceuticals Inc. – operating out of Hopkinton, Mass. and New York – grossed $37.5m before overallotments from the sale of 3m shares at $12.50 each. The company recently reported positive interim results from an ongoing Phase II clinical trial for inarigivir soproxil in the treatment of hepatitis B virus (HBV) and said its partner Gilead Sciences Inc. will expand its ongoing Phase II study in HBV combining Spring Bank's lead drug candidate with Gilead's tenofovir alafenamide. The partners expanded their HBV collaboration in July 2017. (Also see "Deal Watch: Gilead And Spring Bank Set Second Trial Collaboration In HBV" - Scrip, 14 Jul, 2017.)

• The Israeli firm RedHill Biopharma Ltd. reported positive Phase III results in Crohn's disease for RHB-104 on Aug. 1 and closed an offering of 4.17m American depository shares at $6 each on Aug. 14 to gross $25m. (Also see "RedHill's Antibiotic Approach For Crohn's Shows Promise, Caveats Remain" - Scrip, 8 Aug, 2018.) The proceeds will fund preparations for a second Phase III study for RHB-104, initiation of a pivotal Phase III study for RHB-204 in nontuberculous mycobacteria (NTM) infections, and commercial preparations for the Phase III drug Talicia (RHB-105) in Heliobacter pylori infections, among other expenses.

• Newark, Calif.-based Protagonist Therapeutics Inc. grossed $22m from the sale of 2.75m shares via a securities purchase agreement with multiple investors, including BVF Partners LP and its affiliates. The investors also received warrants to purchase 2.75m shares of additional common stock over the next five years. Half of the warrants allow for the purchase of shares at $10 each and the other half can be purchased at $15 each. Protagonist will use the initial proceeds to fund development of PTG-100, an oral alpha-4-beta-7 integrin antagonist peptide in Phase II for the treatment of inflammatory bowel disease. The company's interleukin-23 (IL-23) receptor antagonist peptide PTG-200, which is in Phase I in healthy volunteers to support a planned Phase II study in Crohn's disease, is partnered with Johnson & Johnson's Janssen Biotech Inc.. (Also see "Janssen Enriches Crohn's Portfolio In Deal For Protagonist's Oral IL-23 Inhibitor" - Scrip, 30 May, 2017.)

• Arix Bioscience PLC led an A$24m ($17.5m) venture investment in public equity (VIPE) for Australian firm Pharmaxis Ltd. UK-based Arix invested A$14.2m ($10.3m) in the two-tranche VIPE financing. Pharmaxis will use the cash to advance its Phase I LOXL2 inhibitor for the treatment of fibrotic diseases, such as non-alcoholic steatohepatitis (NASH), idiopathic pulmonary fibrosis (IPF) and heart and kidney fibrosis. (Also see "Arix Taps Australia's 'Undervalued' Pharmaxis As First VIPE, More Planned " - Scrip, 6 Aug, 2018.)

VCs Plant Cash In UK-Based Orchard And Blueberry

Orchard Therapeutics Ltd., which has offices in the UK and US, recently raised a whopping $150m in Series C venture capital four months after acquiring a portfolio of gene therapy candidates from GlaxoSmithKline PLC and just eight months after a $110m VC round.

London-based Orchard is not the only fruit-themed company in the UK receiving venture capital interest in recent days, however. The nanomedicine specialist Blueberry Therapeutics Ltd. said on Aug. 14 that it closed a £10m ($12.7m) Series B round to fund its portfolio of treatments for skin and nail infections.

China Medical Venture Investment (HK) Ltd., a wholly-owned subsidiary of China Medical System Holdings Ltd., and A&B (HK) Co. Ltd. participated in Blueberry's latest funding round, which will support development of BB2603 (terbinafine-nano) for onychomycosis and tinea pedis as well as earlier-stage acne, topical analgesia and atopic dermatitis programs. BB203 is a topical formulation of the antifungal terbinafine delivered as a hand-pump spray, potentially providing comparable efficacy with lower dosing than oral terbinafine; it is in Phase II for onychomycosis. (Also see "Blueberry Therapeutics Ltd." - Scrip, 18 Feb, 2015.)

Blueberry got its start at England's BioHub at Alderley Park. (Also see "BioHub At Alderley Park: A Bioincubator With A Difference" - Scrip, 18 Feb, 2015.)

In other recent start-up and VC funding news:

• The Buck Institute for Research on Aging, Insilico Medicine and Juvenescence Ltd. said on Aug. 14 that they teamed up to launch Napa Therapeutics Ltd., which will develop small molecule drugs against an undisclosed aging-related target. Insilico Medicine, an artificial intelligence specialist focused on aging, could earn up to $100m in milestone fees if Napa Therapeutics is successful. The start-up's efforts will be based on research in NAD metabolism conducted in the lab of Buck Institute President and CEO Eric Verdin. Insilico is a subsidiary of Juvenescence, which closed a $50m Series A round in June. (Also see "Finance Watch: Pfizer Ventures' Dalton Makes Sense Of Neuroscience Focus Within New $600m VC Fund Commitment" - Scrip, 12 Jun, 2018.)

• Co-founders Accelerator Life Science Partners and University of Texas MD Anderson Cancer Center launched Magnolia Neurosciences Corp. on Aug. 13 to develop discoveries from MD Anderson's Therapeutics Discovery division and the Neurodegenerative Consortium. Magnolia launched with $31m in Series A venture capital in a round supported by AbbVie Ventures, Alexandria Venture Investments, ARCH Venture Partners, Eli Lilly & Co., Innovate NY Fund, [Johnson & Johnson Innovation - JJDC Inc.], the Partnership Fund for New York City, Pfizer Ventures, Watson Fund LP, WuXi AppTec Inc.’s Corporate Venture Fund and 180 Degree Capital Corp. The start-up will develop neuroprotective therapies that block programmed cell death – a process that eliminates excess neurons during embryonic development and appears to be reactivated in the brain in Alzheimer's disease and other neurological conditions. Blocking components of that process preserved brain tissue and enhanced memory in animal models.

• Bugworks Research Inc. in Bangalore, India, revealed on Aug. 14 that it closed a $9m Series A round led by University of Tokyo Edge Capital (UTEC) with participation from Acquipharma Holdings, 3ONE4 Capital and other biotech-focused angel investors. Bugworks is developing first-in-class antibiotics, including a novel bacterial topoisomerase inhibitor (NBTI) – a dual-target small molecule that's effective against a broad spectrum of multidrug-resistant bacterial pathogens and which was developed with the company's efflux-pump avoidance platform known as ELUDE. (Also see "Momentum At Indian Innovation Start-Ups: Will Pharma Take Notice?" - Scrip, 20 Feb, 2018.) Bugworks also has a commitment for up to $6.2m from CARB-X. (Also see "Finance Watch: Canaan Closes New VC Fund; CARB-X Backs More Antibiotics" - Scrip, 2 Aug, 2017.)