Finance Watch: Billions Of Dollars In Offerings Despite US Biopharma Stock Slump

Blueprint and Zymeworks raise $300m-plus in follow-on offerings. Also, Arcutis, Black Diamond and Annovis bring the 2020 US IPO count to four; Spring Bank, Surface Oncology and Decibel reveal strategic shifts; and Harmony’s $200m in venture debt leads recent VC deals.

Recent follow-on public offerings (FOPOs) defied the year-to-date decline in biopharmaceutical stock values with FOPOs as large as $325m for Blueprint Medicines Corp. and $320.8m for Zymeworks Inc., hitting the market in late January. 

Big pharma companies left investors feeling good about biopharma stocks in mid-January after spreading the message during the annual J.P. Morgan Healthcare Conference in San Francisco that they are focused on execution this year. However, the positive sentiment seemed to vanish as the month closed with the Nasdaq Biotechnology Index (NBI) down 5.6% as of 31 January versus a 1.4% year-to-date rise as of 16 January. 

Nevertheless, Blueprint, which is down 20.8% year-to-date, was able to raise the largest FOPO during the last two weeks of January and several other biopharma companies had offerings of $100m or more despite also trading in negative territory last month.

Cambridge, MA-based Blueprint won US Food and Drug Administration approval on 10 January for its first drug, the kinase inhibitor Ayvakit (avapritinib) for metastatic gastrointestinal stromal tumor (GIST) patients with a rare platelet-derived growth factor receptor alpha (PDGFRA) exon 18 mutation. (Also see "Blueprint Medicine Gains US Approval For First Drug, Precision Medicine Ayvakit" - Scrip, 10 Jan, 2020.)

The company then launched an offering on 22 January in which it sold 4.71m shares at $69 each to gross $325m, before the sale of additional shares to meet overallotments, which presumably will fund commercialization and ongoing development of Ayvakit as well as the RET inhibitor pralsetinib, which is under FDA review for approval to treat second-line RET-positive non-small cell lung cancer (NSCLC) and second-line RET-positive medullary thyroid cancer.

Vancouver, Canada-based Zymeworks Inc. closed the sale of 5.82m shares at $46.50 each to gross $320.8m, including overallotments, on 27 January. The proceeds will be used to fund clinical development of the Phase II HER2-targeted bispecific antibody ZW25 in HER2-expressing biliary tract, gastroesophageal, breast and other underserved cancers; clinical development of the HER2-targeted bispecific antibody-drug conjugate (ADC) ZW49 for multiple HER2-expressing cancers; and preclinical development of additional programs.

BeiGene Ltd. has rights to both drugs and a third candidate in Asia-Pacific countries. (Also see "AstraZeneca And Galapagos Shine At The 15th Annual Scrip Awards" - Scrip, 4 Dec, 2019.)

In other recent public company financings:

• New Haven, CT-based Biohaven Pharmaceutical Holding Co. Ltd. grossed $250m from the sale of 4.83m shares at $51.75 each on 29 January, not including overallotments. The company has a pipeline of five drug candidates in early to late-stage clinical development and may soon have a commercial drug – the third new acute migraine drug in more than two decades – with the potential launch of the oral CGRP inhibitor rimegepant. A US FDA decision on the drug’s approval is anticipated in the first quarter of this year. (Also see "Lilly, Allergan Beat Biohaven To Acute Migraine Market With Reyvow, Ubrelvy Launches" - Scrip, 31 Jan, 2020.)

• Alector Inc. in South San Francisco brought in $240m from an offering of 9.6m shares at $25 each, including overallotments, which closed on 31 January. Alector is developing drugs for neurodegenerative diseases and went public at $19 per share in February 2019. (Also see "Finance Watch: Gossamer, Alector And Harpoon Launch First Biopharma IPOs Of 2019" - Scrip, 8 Feb, 2019.)

• On 31 January, South San Francisco-based Denali Therapeutics Inc. closed the sale of 9m shares at $23 each to gross $207m for its pipeline of preclinical through early clinical drug candidates, primarily to treat neurodegenerative diseases, but the company also has a few inflammatory disease therapies in its pipeline. Denali is developing drugs based on genetically validated targets and that can be delivered across the blood-brain barrier with biomarkers that show target and pathway engagement. The company is working with multiple partners, including Sanofi through a 2018 deal worth $125m up front. (Also see "Sanofi Stumps Up $125m To Access Denali RIPK1 Inhibitors " - Scrip, 1 Nov, 2018.) Denali went public at $18 per share in 2017. (Also see "IPOs In Review: Biopharma Offerings Bounced Back In 2017 As Returns Rose" - Scrip, 4 Jan, 2018.)

• Montrouge, France-based DBV Technologies SA raised $153.7m on 30 January from the sale of 4.54m ordinary shares in the form of 9.07m American depository shares (ADSs) at $10.25 each in a global offering and from the sale of 2.96m ordinary shares at €18.63 each to qualified investors in Europe. DBV will use the proceeds plus existing cash primarily to prepare for commercialization of its peanut allergy immunotherapy Viaskin Peanut and to fund development of additional products from the Viaskin platform. (Also see "US FDA AdComm Win For Aimmune’s Palforzia Bodes Well For DBV’s Peanut Allergy Patch" - Scrip, 18 Sep, 2019.) The company said its cash on hand will last through the third quarter of 2020, but the newly raised money will fund DBV into the first quarter of 2021.

• Applied Therapeutics Inc. has one of the best-performing stocks out of the companies that went public in 2019, considering the New York-based firm launched its IPO at $10 per share in May and closed a FOPO of 3.15m shares at $45.50 each on 28 January to gross $143.4m, including overallotments. (Also see "Finance Watch: Three New Biopharma IPOs In The US With Eight More Entering The Queue" - Scrip, 29 May, 2019.) Applied Therapeutics aims to develop drugs against validated targets in areas of unmet medical need. The company will use the offering’s proceeds to fund development and pre-launch activities for the galactosemia drug AT-007 and for AT-001 in the treatment of diabetic cardiomyopathy. The company will also use the cash to advance the development of AT-003 for diabetic retinopathy through a planned Phase I trial and expand its development pipeline, among other expenses.

• Hutchison China MediTech Ltd. (Chi-Med) grossed $110m before overallotments from the sale of 4.4m ADSs at $25m each on 23 January. The capital will fund development and commercialization, including the potential launch of cancer drug surufatinib in China later this year. 

• Trillium Therapeutics Inc. in Cambridge, MA grossed $117m from the sale of 41.28m common share and 1.25m Series II non-voting convertible preferred shares at $2.75 each in a FOPO that closed on 29 January. The immuno-oncology company, previously based in Toronto, implemented a restructuring plan in October that included cutting its headcount by 40% to refocus on a single clinical development program – the CD47-targeting candidate TTI-621 for hematological malignancies. (Also see "Finance Watch: Phathom IPO Meets Pricing Goal; Cabaletta, TFF Offerings Go Low" - Scrip, 25 Oct, 2019.)

• Waltham, MA-based ADC specialist ImmunoGen Inc. closed an offering of 24.52m shares at $4.25 each on 27 January that grossed $104.2m to fund the company’s development programs, including its ovarian cancer candidate mirvetuximab soravtansine, which the US FDA said will require another Phase III study before seeking approval. (Also see "ImmunoGen Needs Another Phase III For Its ADC In Ovarian Cancer" - Scrip, 15 May, 2019.)

• T-cell therapy developer Adaptimmune Therapeutics PLC, with locations in Philadelphia as well as Oxford, UK, closed its FOPO of 21m ADSs at $4 each on 22 January to gross $84m, before overallotments. The proceeds will fund ongoing development programs. Adaptimmune and Astellas Pharma Inc. announced a partnership in January to develop off-the-shelf T-cell therapies, which gave the specialist firm $50m up front. SC141466

• London-based chimeric antigen receptor T-cell (CAR-T) therapy developer Autolus Ltd. grossed $80m, before overallotments, from a FOPO of 7.25m ADSs at $11 each. The company, which is developing CAR-T therapies that it hopes are improvements over first-generation products, had some positive follow-up Phase I results for its lead candidate in December after multiple clinical and manufacturing setbacks last year. (Also see "'Serial Killer’ CAR-T Could Help Autolus Bounce Back" - Scrip, 28 Nov, 2019.)

• Concert Pharmaceuticals Inc. in Lexington, MA closed an offering of 5.74m shares at $9.92 each on 30 January to gross $74.7m, including overallotments. Concert also sold prefunded warrants to purchase 1.8m shares of additional stock to an unnamed existing investor. The proceeds will be used to initiate Phase III development for CTP-543 in alopecia areata, develop CTP-692 through Phase II for schizophrenia and to advance other programs. The company reported positive Phase II data for CTP-543, a deuterated formulation of the selective JAK1/2 inhibitor ruxolitinib, in alopecia areata in October. (Also see "Concert Looks To Phase III In Alopecia Areata, Ahead Of Pfizer’s JAK Inhibitor" - Scrip, 3 Sep, 2019.)

• Kopkinton, MA-based Spring Bank Pharmaceuticals Inc. has ended development of its lead drug candidate inarigivir soproxil for chronic hepatitis B due to unexpected adverse events, including a patient death, in the Phase IIb CATALYST 2 clinical trial. The company will shift all of its cash to fund development of its STING agonist programs, including intravenous and oral candidates and an ADC. The move will make Spring Bank’s $54.5m cash balance as of 31 December last into late 2022. The company went public at $11 per share in 2016 and closed at $1.33 on 29 January when it announced the decision to discontinue inarigivir development; no specific layoffs were announced. (Also see "IPO Update: Intellia Launch Shows CRISPR Still Excites While Others Struggle" - Scrip, 8 May, 2016.)

• Surface Oncology Inc. also said on 27 January that it will extend its cash runway into 2022 after restructuring to focus primarily on the clinical development of the anti-CD39 antibody SRF617 for solid tumors and the interleukin-27 inhibitor SRF388 for liver, renal and other cancers. Surface will cut its work force by 35% and seek partners for its CD112R-targeting drug SRF813 and its regulatory T-cell program. The company launched its IPO at $15 per share in 2018 and closed at $2.65 following the restructuring announcement. (Also see "IPO Update: Returns Halved As Two Biopharmas Go Public In April; Unity Is May's First" - Scrip, 2 May, 2018.)

Class Of 2020 IPOs Will Look To Meet High 2019 Bar

Initial public offerings in the US by biopharma firms have had a somewhat slow start in 2020, but I-Mab Biopharma Co. Ltd. got things going with its $103.7m offering on 16 January and three more followed during the last week of January. 

Market observers expect to see a busy first half of 2020 for IPOs before fears about the outcome of the US presidential election thwart new first-time offerings. This year’s IPOs will look to keep last year’s momentum going, since the average return for companies that went public in 2019 was 45.1% at the start of 2020. (Also see "IPO Year In Review: Late Rally Gives 50 Newly Public Biopharma Firms A 45.1% Average Return" - Scrip, 2 Jan, 2020.)

Berwyn, PA-based Annovis Bio Inc. went public on 28 January and closed the IPO on 31 January, grossing $13.8m from the sale of 2.3m shares at $6 each – the low end of a $6 to $8 range proposed back in September. (Also see "IPO Update: 35 Biopharmas Provide -6.1% Average Return; New Offerings Feel Stock Market Impact" - Scrip, 2 Oct, 2019.) Annovis has a drug targeting two neurotoxic proteins and is running a Phase IIa proof-of-concept study in Alzheimer’s disease to test the candidate with plans to start a Phase IIa trial in Parkinson’s disease this year.

Cancer drug developer Black Diamond Therapeutics Inc. in Cambridge, MA and New York launched its IPO of 10.59m shares at $19 each on 29 January to gross $201.1m before overallotments. The company proposed the sale of 8.9m shares at $16 to $18 each a week earlier. Not only did the offering price above expectations, Black Diamond’s stock price more than doubled in its first day of trading to close at $39.48 on 30 January.

Westlake Village, CA-based Arcutis Biotherapeutics Inc., which is developing treatments for immune-mediated dermatological diseases, price its IPO of 9.38m shares at $17 each to gross $159.4m, before overallotments, on 30 January. This was at the high end of a $15 to $17 price range for 7.8m shares that was proposed earlier in the month.

In future offerings, the New York-based computational biopharma company Schrodinger Inc., which said earlier this month that it would raise up to $100m in a future IPO, proposed the sale of 10m shares at $14 to $16 each in a US Securities and Exchange Commission (SEC) filing on 27 January. This would raise up to $160m before overallotments.

Cambridge, MA-based Beam Therapeutics Inc. also indicated in its first SEC filing back in September that it would raise up to $100m in an IPO, and as of 31 January the company has proposed the sale of 6.25m shares at $15 to $17 each, which would gross up to $106.3m before overallotments. The company’s technology platform aims to edit DNA by changing a single letter in the genetic code. (Also see "First Of Its Kind: Beam Seeks To Erase-And-Replace Single Letters In DNA's Alphabet" - Scrip, 15 May, 2018.)

Private Company Updates: Decibel Changes Its Tune

Decibel Therapeutics did not announce a new venture capital round, but it did reveal a new strategy on 29 January along with the retirement of its CEO Steven Holtzman. Laurence Reid, who most recently was an entrepreneur-in-residence at Third Rock Ventures, will take the helm at Decibel. Reid previously was CEO of Warp Drive Bio Inc., which was acquired by Revolution Medicines Inc. in 2018. (Also see "Deal Watch, M&A: Warp Drive And Its Partnerships Acquired By Revolution" - Scrip, 19 Oct, 2018.)

Boston-based Decibel, which is focused on the development of novel therapeutics for hearing loss and balance disorders, also announced a new strategic research focus on a regenerative medicine approach for the inner ear, including through a partnership with Rockefeller University that gives the company rights to novel small molecules targeting LATS kinases – proteins in a regenerative pathway. Decibel said it will restructure its employee base and discontinue some early-stage preclinical programs.

The company already has built single cell genomics and bioinformatics platforms to identify and validate targets. This has given it insights into regulatory pathways and inner ear delivery mechanisms that allow for precise control over gene expression in the inner ear, which will help differentiate Decibel’s AAV-based gene therapies. 

Its lead gene therapy candidate is DB-201 in collaboration with Regeneron Pharmaceuticals Inc., which will be tested in the treatment of bilateral vestibulopathy – a condition that impairs balance, mobility and vision. The treatment may be applicable to a range of age-related balance disorders. Investigational new drug (IND) application-enabling studies will begin in the first half of 2020.

The partners, which are working together under a November 2017 agreement, are also working on DB-OTO, a gene therapy for congenital deafness due to a mutation in the otoferlin gene, which is expected to enter clinical trials in 2021. (Also see "Novel Regeneron Deal Puts Partner Decibel In The Driver's Seat" - Scrip, 29 Nov, 2017.)

Decibel also is developing DB-020 to prevent hearing loss in people receiving cisplatin chemotherapy, which is being studied in a Phase Ib clinical trial. The company last raised venture capital in 2018, when it closed a $55m series C round. Decibel got its start in 2015 with a $57m series A. 

In recent venture capital deals:

• Plymouth Meeting, PA-based Harmony Biosciences LLC said on 27 January that it completed an agreement with OrbiMed Advisors LLC for a $200m debt facility to fund commercialization of Wakix (pitolisant), which the US FDA approved in August for the treatment of narcolepsy, as well as for research and development of additional rare disease programs. (Also see "Keeping Track: A Quintet Of Novel Approvals" - Pink Sheet, 17 Aug, 2019.) The company previously closed a $200m venture debt facility with CRG Group LP in March 2019. (Also see "Finance Watch: Flagship Raises $824m To Speed Growth Of Its Portfolio Companies" - Scrip, 22 Mar, 2019.)

• Quench Bio in Cambridge, MA announced on 27 January that it closed a $50m series A round led by RA Capital Management to fund drug development in severe inflammatory diseases based on new insights into gasdermin biology and innate immunology. Atlas Venture incubated Quench starting in 2018 and the VC firm co-founded and seeded the start-up with Arix Bioscience PLC. Both investors and new funder AbbVie Ventures participated in the series A round. Quench’s lead development program targets gasdermin D, which is involved in inflammatory cell death pathways that are implicated in rheumatoid arthritis, lupus, multiple sclerosis and non-alcoholic steatohepatitis (NASH).

• South San Francisco-based Mammoth Biosciences revealed on 30 January that it closed a $45m series B round to fund its development of CRISPR-based therapeutics and diagnostics. Decheng Capital led the round with participation from Mayfield, NFX, Verily and Brook Byers. Mammoth, which said it has raised $70m to date, is exploring novel Cas systems that enable the use of CRISPR in diagnostics, gene editing and therapeutics, and has identified Cas14 as a small enzyme that allows for diverse targeting and high fidelity. The company is exploring partnerships with biotechnology and pharmaceutical partners.

• Lyra Therapeutics Inc. in Watertown, MA disclosed a $30m series C round on 29 January to fund development and commercialization of novel integrated drug and delivery solutions for local treatment of ear, nose and throat diseases. Perceptive Advisors led the round with participation from new investors Clifton Capital and existing backers RA Capital Management, Soleus Capital, ArrowMark Partners, Polaris Venture Partners, North Bridge Venture Partners and Intersouth Partners. The venture cash will support development of two lead product candidates for the delivery of continuous drug therapy to the sinonasal passages in the treatment of chronic rhinosinusitis, including LYR-210 for surgery-naïve patients and LYR-220 for patients who have undergone surgery for the condition.