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Summary

  • Achaogen is a clinical-stage biopharmaceutical company.
  • The lead product is funded with a contract from the Biomedical Advanced Research and Development Authority for up to $103.8 million.
  • AKAO initiated a Phase 3 superiority trial of plazomicin in the first quarter of 2014.

Based in South San Francisco, CA, Achaogen (NASDAQ:AKAO) scheduled a $65 million IPO on the Nasdaq with a market capitalization of $205 million at a price range midpoint of $13 for Wednesday, March 12, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents
Manager, Joint managers: Credit Suisse, Cowen
Co-Managers: William Blair, Needham & Company

Summary
AKAO is a clinical-stage biopharmaceutical company passionately committed to the discovery, development, and commercialization of novel antibacterials to treat multi-drug resistant, or MDR, gram-negative infections.

AKAO's plazomicin program is funded in part with a contract from the Biomedical Advanced Research and Development Authority for up to $103.8 million.

Valuation
Glossary

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

Achaogen

$205

11

-16

3.2

3.2

32%

Conclusion
AKAO is developing plazomicin, its lead product candidate, for the treatment of serious bacterial infections due to MDR Enterobacteriaceae, including carbapenem-resistant Enterobacteriaceae, or CRE.

AKAO initiated a Phase 3 superiority trial of plazomicin in the first quarter of 2014.

AKAO has also received FDA fast track designation for the development and regulatory review of plazomicin to treat serious and life-threatening CRE infections.

In 2013, the Centers for Disease Control and Prevention identified CRE as a "nightmare bacteria" and an immediate public health threat that requires "urgent and aggressive action."

The rating on the AKAO IPO is positive.

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

Business
AKAO is a clinical-stage biopharmaceutical company passionately committed to the discovery, development, and commercialization of novel antibacterials to treat multi-drug resistant, or MDR, gram-negative infections.

AKAO is developing plazomicin, its lead product candidate, for the treatment of serious bacterial infections due to MDR Enterobacteriaceae, including carbapenem-resistant Enterobacteriaceae, or CRE.

In 2013, the Centers for Disease Control and Prevention identified CRE as a "nightmare bacteria" and an immediate public health threat that requires "urgent and aggressive action."

Phase 3
AKAO initiated a Phase 3 superiority trial of plazomicin in the first quarter of 2014.

Through the Special Protocol Assessment procedure, the U.S. Food and Drug Administration, or FDA, has agreed that the design and planned analyses of its single pivotal Phase 3 trial adequately address objectives in support of a New Drug Application.

AKAO has also received FDA fast track designation for the development and regulatory review of plazomicin to treat serious and life-threatening CRE infections.

Plazomicin is the first clinical candidate from AKAO's gram-negative antibiotic discovery engine, and AKAO has other programs in early and late preclinical stages focused on other MDR gram-negative infections.

Contract funding
AKAO's plazomicin program is funded in part with a contract from the Biomedical Advanced Research and Development Authority for up to $103.8 million. AKAO has global commercialization rights to plazomicin, which has patent protection in the United States extending through 2031.

History
Since commencing operations in 2004, AKAO has devoted substantially all of its resources to identifying and developing its product candidates, including conducting preclinical studies and clinical trials and providing general and administrative support for these functions.

In addition to plazomicin, AKAO's research team is focused on discovering medicines with novel mechanisms of action for serious infections caused by MDR Pseudomonas aeruginosa.

AKAO is taking a multifaceted approach to identify new antipseudomonal agents through its small molecule program, or LpxC inhibitor program, and therapeutic antibody discovery program.

Growth Plan
AKAO expects to nominate at least one clinical candidate from its antipseudomonal program in 2014 and to file an investigational new drug application, or IND, in 2015.

AKAO also maintains an active discovery and development program in infections caused by gram-negative bacteria, drawing on knowledge gained through its work on LpxC inhibitors to identify compounds that bind and inhibit additional essential enzymes in the gram-negative outer membrane biosynthesis pathway.

Dividend Policy
No dividend is planned.

Intellectual Property
AKAO has sought patent protection in the United States and certain other jurisdictions for plazomicin, ACHN-975, and certain other inventions to which AKAO has rights, where available and when appropriate.

The patent portfolio for plazomicin is based upon an Achaogen-owned patent family that includes patents and patent applications directed to plazomicin and structural analogs thereof, pharmaceutical compositions containing plazomicin or analogs thereof, and methods of using plazomicin or analogs thereof in the treatment of bacterial infections.

As of January 31, 2014, this patent family included one U.S. patent (U.S. Patent No. 8,383,596, issued February 26, 2013), one pending U.S. patent application (Application Serial No. 13/734,729, filed January 4, 2013) and fourteen corresponding foreign patents and patent applications.

AKAO's patent portfolio for antipseudomonal LpxC inhibitor compounds is comprised of seven distinct patent families. Six of these patent families are Achaogen-owned, and one is in-licensed from UW and co-owned by UW with Novartis Corp.

Competition
The pharmaceutical industry is very competitive and subject to rapid and significant innovation.

AKAO's potential competitors include major multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical and generic drug companies, universities, and other research institutions.

Many of AKAO's competitors have greater financial resources, as well as larger research and development staff and more experienced marketing and manufacturing organizations.

As a result, these companies may obtain regulatory approval more rapidly than AKAO is able to and may be more effective in selling and marketing their products.

Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies.

AKAO's competitors may succeed in developing, acquiring or licensing technologies and drug products that are superior to, or more effectively marketed than, plazomicin or any other drug candidate that AKAO is currently developing or that AKAO may develop, which could render its products obsolete and noncompetitive.

5% stockholders
Entities Affiliated with Domain Partners 18.75%
Entities Affiliated with Venrock 16.20%
The Wellcome Trust Limited as trustee of the Wellcome Trust 14.61%
ARCH Venture Fund VI, L.P. 13.16%
Entities Affiliated with Versant Venture Capital 11.88%
Omega Fund IV, L.P. 8.22%
Entities Affiliated with 5AM Ventures 5.58%
Kenneth J. Hillan, M.B., Ch.B. 5.02%

Use of proceeds
AKAO expects to net $57 million from its IPO. Proceeds are allocated as follows:

$35 million to $40 million of the net proceeds from this offering in combination with the expected funding from AKAO's BARDA contract, to support AKAO's planned registration program for plazomicin.

the remainder to fund AKAO's other research and development activities, and for working capital and general corporate expenditures. AKAO's may use a portion of the proceeds to make scheduled payments of principal and interest on its outstanding loan with Oxford Finance LLC and Silicon Valley Bank, which is scheduled to be fully repaid by February 2015.

Disclaimer: This AKAO IPO report is based on a reading and analysis of AKAO'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: Achaogen