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Based in Natick, MA, Karyopharm Therapeutics (NASDAQ:KPTI) scheduled an $85 million IPO on the NASDAQ Global Market, with a market capitalization of $414 million at a price range midpoint of $15 for Thursday, November 7, 2013.

13 operating company IPOs scheduled for this week. The full IPO calendar can be found at IPOpremium.

F-1 filed Oct. 28, 2013

Manager, Joint managers: BofA Merrill Lynch and Leerink Swann

Co-Managers: JMP Securities/ Oppenheimer

Summary

KPTI is a clinical-stage pharmaceutical company founded in December 2008 by Dr. Sharon Shacham. One of the target markets is multiple myeloma, a $3.2 billion market.

KPTI is focused on the discovery and development of novel first-in-class drugs directed against nuclear transport targets for the treatment of cancer and other major diseases. Its scientific expertise is focused on the understanding of the regulation of intracellular transport between the nucleus and the cytoplasm.

Valuation

Valuation Ratios

Mrkt

Price /

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% offered

annualizing June 6 mos

Cap (MM)

Sls

Erngs

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in IPO

Karyopharm Therapeutics

$414

776.3

-25.9

3.0

3.0

21%

Accumulated deficit of $41.1 million.

Glossary

Conclusion

Buy KPTI on the IPO.

  • KPTI is priced at 3 times book,
  • Has good phase 1 clinical trial results, and
  • One of its target markets is $3.2 billion in size.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above:

Business

KPTI is a clinical-stage pharmaceutical company founded in December 2008 by Dr. Sharon Shacham. One of the target markets if multiple myeloma.

KPTI is focused on the discovery and development of novel first-in-class drugs directed against nuclear transport targets for the treatment of cancer and other major diseases. Its scientific expertise is focused on the understanding of the regulation of intracellular transport between the nucleus and the cytoplasm.

KPTI has discovered and developed novel, small molecule, Selective Inhibitors of Nuclear Export, or SINE, compounds that inhibit the nuclear export protein XPO1. KPTI has worldwide rights to these SINE compounds.

Multiple Myeloma Research Foundation

In July 2011, KPTI entered into a research agreement with the Multiple Myeloma Research Foundation, or MMRF, for the research and development of small molecule XPO1 inhibitor compounds for the treatment of multiple myeloma.

MMRF awarded KPTI a $1 million grant, all of which has been paid to based on achievement of specified milestones. KPTI owns all inventions and other intellectual property that arose or will arise from the conduct of the research program.

Multiple myeloma market size

Multiple myeloma is a form of plasma cancer that develops in the bone marrow. It is the second most prevalent blood cancer type in the U.S. In 2011, the global multiple myeloma drugs market was calculated at USD 3.2 billion. Source: Transparency market research

Lead drug candidate

Its lead drug candidate, Selinexor (KPT-330), is an XPO1 inhibitor being evaluated in multiple open-label Phase 1 clinical trials in patients with heavily pretreated relapsed and/or refractory hematological and solid tumor malignancies.

As of September 20, 2013, KPTI had administered Selinexor to over 170 patients in these trials. Preliminary evidence of anti-cancer activity has been observed in some patients and Selinexor has been sufficiently well-tolerated to allow many of these patients to remain on therapy for prolonged periods, including several who have remained on study for over 8-12 months.

To its knowledge, no other XPO1 inhibitors are in clinical development at the present time.

One of the ways in which the cell regulates the function of a particular protein is by controlling the protein's location within the cell, as a specific function may only occur within a particular location in the cell. In healthy cells, nuclear transport, both into and out of the nucleus, is a normal and regular occurrence that is tightly regulated and requires specific carrier proteins to occur. XPO1 mediates the export of approximately 220 different mammalian cargo proteins, including the vast majority of tumor suppressor proteins.

Moreover, XPO1 appears to be the only nuclear exporter for most of these tumor suppressor proteins. Cancer cells have increased levels of XPO1, causing the increased export of these tumor suppressor proteins from the nucleus.

Since the tumor suppressor proteins need to be located in the nucleus to promote programmed cell death, or apoptosis, XPO1 overexpression in cancer cells counteracts the natural apoptotic process that protects the body from cancer.

Due to XPO1 inhibition by its SINE compounds, the export of tumor suppressor proteins is prevented, thereby leading to their accumulation in the nucleus which subsequently reinitiates and amplifies their natural apoptotic function in cancer cells.

This leads to the death of cancer cells through apoptosis with minimal effects on normal cells. The figure below depicts the process by which its SINE compounds inhibit the XPO1 nuclear export of tumor suppressor proteins.

Intellectual property

As of September 30, 2013, KPTI was the sole owner of one patent in the United States (issued August 20, 2013 as U.S. Patent No. 8,513,230 and having an expiration date of March 5, 2031) and KPTI had 19 pending patent applications in the United States, one of which is co-owned with a third party, four pending international applications filed under the Patent Cooperation Treaty (PCT) and 15 pending patent applications in foreign jurisdictions.

Selinexor (KPT-330): KPTI's Selinexor patent portfolio covers the composition of matter and methods of use of Selinexor, as well as methods of making Selinexor, and consists of four pending foreign patent applications (one in each of Argentina, Taiwan, Pakistan and Venezuela) and a PCT application that provides the opportunity for seeking protection in all PCT member states, including the United States.

Selinexor (Wound Healing): KPTI's patent portfolio covering Selinexor for wound healing covers methods of using Selinexor or Verdinexor for wound healing, and consists of one pending U.S. provisional patent application. KPTI expects to file non-provisional patent applications claiming the benefit of this provisional patent application in 2014, and any patents that may issue from these patent applications will expire no earlier than 2034.

KPT-350: KPTI's KPT-350 patent portfolio covers both the composition of matter and methods of use of KPT-350, and consists of one pending U.S. provisional patent application, one pending non-provisional U.S. patent application and one PCT application that provides the opportunity for seeking protection in all PCT member states.

PAK4 Inhibitors: KPTI's PAK4 patent portfolio covers both the composition of matter and methods of use of the PAK4 inhibitors described therein and consists of three patent families with eight pending U.S. provisional patent applications in total. KPTI expects to file non-provisional patent applications claiming the benefit of these provisional applications in late 2013 for one family and the second half of 2014 for the other two families.

Verdinexor (KPT-335): KPTI's Selinexor patent portfolio described above also covers both the composition of matter and methods of use of Verdinexor, as well as methods of making Verdinexor.

Competition

Kosan Biosciences Inc. (acquired by Bristol-Myers Squibb Company) has evaluated compounds derived from leptomycin B in preclinical studies. CanBas Co., Ltd. has been developing a product referred to as CBS9106, a preclinical XPO1 inhibitor.

KPTI's PAK4 inhibitors, if developed and approved, would compete with currently-marketed therapies and drugs in clinical development to treat cancer.

However, there are currently no marketed therapies that selectively target PAK4.

Pfizer Inc. developed PF-03758309, a non-selective PAK inhibitor, meaning that this compound inhibited several of the PAK family members, and not solely PAK4, through Phase 1 clinical development, but that compound had poor oral bioavailability and, to KPTI's knowledge, its development has been discontinued.

KPTI is aware that PAK4 biology is being evaluated preclinically by AstraZeneca plc and Genentech, Inc. (acquired by Roche Holding AG). KPTI is not aware of any PAK4 inhibitors that are in clinical development at the present time.

5% stockholders

Chione Ltd.(1) 46.78%

Plio Limited(2) 14.56%

Entities Affiliated with Foresite Capital 9.42%

Entities Affiliated with Delphi Ventures 8.17%

Michael G. Kauffman, M.D., Ph.D.(5) 8.85%

Sharon Shacham, Ph.D., M.B.A. 8.85%

Mansoor Raza Mirza, M.D. 8.17%

Use of proceeds

KPTI expects net $88.3 million from its IPO.

Proceeds are allocated as follows:

$53.0 million to fund the continued clinical development of its lead drug candidate, Selinexor (KPT-330), including $40.0 million for initiating and conducting planned Phase 2/3 clinical trials of Selinexor in two indications and $13.0 million for initiating and conducting Phase 2 clinical trials of Selinexor in two solid tumor indications;

$5.0 million to continue KPTI's preclinical development of its drug candidates for anti-inflammatory, viral and wound-healing indications;

$30.0 million for discovery, research, preclinical development and clinical trials of additional drug candidates; and the balance for working capital and other general corporate purposes.

Disclaimer: This KPTI IPO report is based on a reading and analysis of KPTI's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.