IPO Preview: Aquinox Pharmaceuticals


Clinical-stage pharmaceutical company.

Shareholders indicated an interest in buying up to $15 million on the IPO.

Pre-IPO J&J Dev owns 24%, Pfizer owns 16.5%.

Based in Vancouver, Canada, Aquinox Pharmaceuticals (NASDAQ:AQXP) scheduled a $41 million IPO on the Nasdaq with a market capitalization of $107 million at a price range midpoint of $11 for Friday, March 7, 2014.

The full IPO calendar is available at IPOpremium.

Shareholders have indicated an interest in buying up to $15 million on the IPO.

SEC Documents
Manager, Joint managers: Jefferies, Cowen & Company

Co-Manager: Canaccord Genuity

AQXP is a clinical-stage pharmaceutical company discovering and developing novel drug candidates to treat inflammation and cancer.

AQXP has no collaboration partners and most of its intellectual property is licensed.

Pfizer (NYSE:PFE) owns 16.5% pre-IPO. PFE has a market cap of $208 billion.

"Certain of our directors and existing stockholders, or their affiliates, have indicated an interest in purchasing up to an aggregate of approximately $15.0 million of shares of our common stock in this offering."



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AQXP's price to book is 2.3, which is on the low side for the pharma and biopharma IPO segment.

AQXP is in Phase 2 clinical trials without a collaboration partner, although Pfizer is a 16.5% pre-IPO shareholder and Johnson & Johnson Development Corporation is a 24% pre-IPO shareholder. Also, AQXP patent portfolio has been acquired, not developed internally.

The rating on AQXP is positive.

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


AQXP is a clinical-stage pharmaceutical company discovering and developing novel drug candidates to treat inflammation and cancer.

AQXP's primary focus is anti-inflammatory product candidates targeting SHIP1, which is a key regulator of an important cellular signaling pathway in immune cells, known as the PI3K pathway.

Phase 2 clinical trials
AQXP's lead product candidate, AQX-1125, is a SHIP1 activator and has demonstrated broad anti-inflammatory activity. AQX-1125 has successfully completed three clinical trials dosed as a once daily oral product with over 100 subjects having received AQX-1125 to date.

AQXP are currently investigating AQX-1125 in two Phase 2 clinical trials, one for Chronic Obstructive Pulmonary Disease, or COPD, and one for Bladder Pain Syndrome/Interstitial Cystitis, or BPS/IC. COPD and BPS/IC are debilitating chronic inflammatory diseases affecting millions of people worldwide.

Inflammation can be reduced by activation of SHIP1 (SH2-containing inositol-5'-phosphatase 1), which is a natural modulator of the PI3K (P13 kinase) pathway.

If the PI3K pathway is overactive, immune cells may produce an abundance of pro-inflammatory signaling molecules and migrate to and concentrate in tissues, resulting in excessive or chronic inflammation.

Drugs activating SHIP1 may reduce the function and migration of immune cells and have an anti-inflammatory effect. In addition, because SHIP1 is predominantly present in immune cells, off-tissue toxicities may be minimized. Immune cells with lowered levels of SHIP1 cause abnormal inflammation at mucosal surfaces in response to inflammatory stimuli.

Accordingly, AQXP is targeting inflammatory diseases that occur at mucosal surfaces, including those of the respiratory, urinary and gastrointestinal tracts, for which AQXP believes there is broad therapeutic and market potential.

Dividend Policy

No dividends are planned.

Intellectual Property

AQXP is the sole owner of a patent portfolio that includes issued patents and pending patent applications covering compositions of matter and methods of use of AQX-1125.

AQXP acquired these patents and applications relating to AQX-1125 by way of an asset purchase from Biolipox AB in August 2009.

This patent portfolio includes three issued United States patents and nine foreign patents issued in Europe, Japan, Canada, Korea, Mexico, Russia, Australia and New Zealand. AQXP's issued patents cover the composition of matter of both the class of compounds to which AQX-1125 belongs, and also AQX-1125 specifically, and methods for using AQX-1125.


AQXP faces competition from other pharmaceutical and biotechnology companies, academic institutions, governmental agencies, and public and private research institutions, among others. Any product candidates that AQXP successfully develops and commercializes will compete with existing therapies and new therapies that may become available in the future.

5% stockholders

Ventures West 8 Limited Partnership 25.8%

Johnson & Johnson Development Corporation 23.8%

Pfizer, Inc. 16.5%

B.C. Advantage Fund (VCC) Ltd. 7.3%

Entities affiliated with Baker Brothers, Inc. 12.9%

Augment Investments Ltd. 8.1%

Use of proceeds

AQXP expects to net $35.4 million from its IPO. Proceeds are allocated as follows:

$12 million to $18 million to conduct additional toxicology studies, dose ranging clinical trials, large batch manufacturing and process development, all in preparation for potential Phase 3 clinical development of AQX-1125;

$9 million to $15 million to conduct additional Phase 2 clinical trials to evaluate AQX-1125 as a potential treatment in indications beyond COPD and BPS/IC;

$5 million to advance one or more of AQXP's next generation SHIP1 activator compounds through preclinical development in preparation for a potential IND filing; and

the remainder to fund working capital, capital expenditures and other general corporate purposes.

Disclaimer: This AQXP IPO report is based on a reading and analysis of AQXP's S-1 filing, which can be found here, and a separate, independent analysis by IPOpremium.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.