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Based in Watertown, MA, Dicerna Pharmaceuticals (NASDAQ:DRNA) scheduled a $60 million IPO with a market capitalization of $188 million on the Nasdaq, at a price range mid-point of $12 for Thursday, January 30, 2014.

The full IPO calendar is available at IPOpremium.com

On January 27, DRNA increased the price range mid-point to $14 from $12, and increased shares to 6 million from 5 million. Total expected to be raised increased to $84 million from $60 million, resulting in 40% greater proceeds than previously anticipated.

SEC Documents

Manager, Joint Managers: Jefferies, Leerink Partners, Stifel

Co-Managers: Baird

Summary

DRNA is a biopharmaceutical company focused on the discovery and development of innovative treatments for rare inherited diseases involving the liver and for cancers that are genetically defined. DRNA is using its RNA interference (RNAi) technology platform to build a broad pipeline in these therapeutic areas.

In oncology, DRNA is currently directing its development efforts toward its proprietary product candidate DCR-M1711 for the treatment of MYC-related cancers, including hepatocellular carcinoma (HCC), which DRNA believes represents 85 to 90 percent of primary liver cancer. DRNA intends to begin clinical trials of DCR-M1711 in the first half of 2014.

In December 2009, DRNA entered into a research collaboration and license agreement (the collaboration agreement) with Kyowa Hakko Kirin Co., Ltd. (KHK) for the research, development and commercialization of drug delivery platforms and DsiRNA molecules for therapeutic targets, primarily in oncology.

Valuation

Glossary

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing Sept 9 mos '13

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

Dicerna Pharmaceuticals

$187

n/a

-11.9

1.9

1.9

32%

Conclusion

DRNA has a major partner, is focused on a very large liver cancer market, and on the IPO is valued at only 1.9 times book value. Also "Certain of our existing stockholders, including certain affiliates of our directors, have indicated an interest in purchasing approximately $35.0 million of shares of our common stock in this offering at the initial public offering price." (cover page).

DRNA is a buy on the IPO.

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

Business

DRNA is a biopharmaceutical company focused on the discovery and development of innovative treatments for rare inherited diseases involving the liver and for cancers that are genetically defined. DRNA is using its RNA interference (RNAi) technology platform to build a broad pipeline in these therapeutic areas.

Product focus

In both rare diseases and oncology, DRNA is pursuing targets that have historically been difficult to inhibit using conventional approaches, but where it believes connections between targets and diseases are well understood and documented.

DRNA intends to discover, develop and commercialize these novel therapeutics either on its own or in collaboration with pharmaceutical partners.

Business Strategy

DRNA expects that its strategy to partner the development of product candidates will help fund the costs of clinical development and enable DRNA to diversify risk across a number of programs.

In oncology and other more prevalent disease areas, DRNA intends to partner its products while seeking to retain significant portions of the commercial rights in North America.

In indications such as rare diseases in which a small sales force will suffice, DRNA expects to retain substantially all commercial rights in key markets.

Research focus

In oncology, DRNA is currently directing its development efforts toward its proprietary product candidate, DCR-M1711, for the treatment of MYC-related cancers, including hepatocellular carcinoma, which DRNA believes represents 85 to 90 percent of primary liver cancer. DRNA intends to begin clinical trials of DCR-M1711 in the first half of 2014.

DRNA also has discovery and early development programs against a series of additional disease targets in the liver.

In the rare disease field, DRNA is developing a proprietary treatment, DCR-PH1, for the rare and serious inherited disorder primary hyperoxaluria 1 (PH1).

Clinical trials

DRNA intends to begin clinical trials of DCR-M1711 in the first half of 2014.

DRNA intends to begin clinical trials of DCR-PH1 in 2015.

Kyowa Hakko Kirin Co., Ltd. (KHK)

In December 2009, DRNA entered into a research collaboration and license agreement (the collaboration agreement) with Kyowa Hakko Kirin Co., Ltd. (KHK) for the research, development and commercialization of drug delivery platforms and DsiRNA molecules for therapeutic targets, primarily in oncology.

Under the collaboration agreement, DRNA engaged in the discovery of DsiRNA molecules against KRAS and other gene targets nominated by KHK. In 2011, KHK exercised its option for one additional target, the identity of which has not been publicly disclosed.

As part of the collaboration with Kyowa Hakko Kirin Co., Ltd. (KHK), a global pharmaceutical company, DRNA is developing a product candidate that targets the oncogene KRAS, which is frequently mutated in numerous major cancers, including non-small cell lung cancer, colorectal cancer and pancreatic cancer.

KHK is responsible for global development of the KRAS program, including all development expenses.

For the KRAS product candidate, DRNA retains an option to co-promote in the U.S. for an equal share of the profits from U.S. net sales.

DRNA is also developing a product candidate targeting an oncogene in collaboration with KHK.

For each product candidate in the collaboration with KHK, DRNA has the potential to receive clinical, regulatory and commercialization milestone payments of up to $110.0 million and royalties on net sales of each such product candidate.

Intellectual property

DRNA owns three U.S. patents and a number of pending patent applications with claims to methods and compositions of matters that cover various aspects of its RNAi technology and its discovery technologies, including its proprietary DsiRNA molecules and lipid delivery vehicles.

DRNA's three U.S. patents are U.S. 8,349,809 (issued in January 2013 with an expiration date of January 2030); U.S. 8,372,816 (issued in February 2013 with an expiration date of April 2030); and U.S. 8,513,207 (issued in August 2013 with an expiration date of May 2030).

DRNA also owns numerous patent applications covering specific DsiRNA sequences that drive activity against high-value disease targets, including MYC, KRAS, CTNNB1 (ß-catenin), and other targets.

Further, DRNA owns seven U.S. patents expiring between 2015 and 2017 and numerous patent applications with claims to methods and compositions of matters related to its lipid delivery technology, such as lipid compositions and particle formulations and the EnCore formulation process.

Competition

DRNA believes that its scientific knowledge and expertise in RNAi-based therapies provide it with competitive advantages over the various companies and other entities that are attempting to develop similar treatments.

However, DRNA faces competition at the technology platform and therapeutic indication levels from both large and small biopharmaceutical companies, academic institutions, governmental agencies and public and private research institutions.

Many of DRNA's competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than DRNA does.

5% stockholders

Entities affiliated with Domain Associates 16.8%

Skyline Venture Partners V, L.P. 14.7%

Affiliates of Deerfield Mgmt, L.P. 13.4%

RA Capital Healthcare Fund, LP 13.4%

Abingworth Bioventures V, LP 10.3%

Brookside Capital Partners Fund LP 9.4%

S.R. One, Limited 8.0%

Entities affiliated with Oxford Biosciences Partners V, L.P. 7.3%

Use of proceeds

DRNA expects to net $52.5 million from its IPO. Proceeds are allocated as follows:

$16 million for additional preclinical studies and Phase 1 clinical trials for DCR-M1711 to evaluate safety and biological markers of efficacy in oncology patients;

$10 million for preclinical studies and Phase 1 clinical trials of DCR-PH1 to evaluate safety and biological markers of efficacy in patients with Primary Hyperoxaluria 1; and

$10 million for preclinical studies and clinical trials of another liver target that DRNA plans to identify and advance into development in 2015.

continued technology platform development, working capital and general corporate purposes.

Disclaimer: This DRNA IPO report is based on a reading and analysis of DRNA'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.

Source: IPO Preview: Dicerna Pharmaceuticals