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Summary

  • Clinical-stage biopharmaceutical company focused on developing novel therapeutics for serious unmet medical needs, with an initial focus on muscle wasting conditions and oncology.
  • ATRA's intellectual property was acquired from Amgen.
  • Pre-IPO VC firm Kleiner Perkins owns 18.6%. Amgen and Celgene each own about 8.6%.

Based in Brisbane, CA, Atara Biotherapeutics (Pending:ATRA) scheduled a $75 million IPO on the Nasdaq with a market capitalization of $291 million at a price range midpoint of $15 for Thursday, July 24, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents

Manager, Co-Managers: Goldman Sachs, Citigroup

Joint Managers: Jefferies & Co

End of lockup (180 days): Tuesday, January 20, 2015

End of 25-day quiet period: Monday, August 18, 2014

Summary
ATRA is a clinical-stage biopharmaceutical company focused on developing novel therapeutics for serious unmet medical needs, with an initial focus on muscle wasting conditions and oncology.

ATRA's product candidates are biologics targeting myostatin and activin, members of the TGF-ß protein superfamily, which play roles in the growth and maintenance of muscle and many other body tissues.

ATRA's intellectual property was acquired from Amgen (NASDAQ:AMGN).

Pre-IPO VC firm Kleiner Perkins owns 18.6%. Amgen and Celgene (NASDAQ:CELG) each own about 8.6%

Valuation

Glossary

Valuation Ratios

Mrkt Cap ($mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Annualizing Q1 '14

Atara Biotherapeutics

$291

n/a

-10.4

2.3

2.2

26%

Conclusion

The rating on ATRA is neutral. Existing shareholders are not buying on the IPO. ATRA has one product candidate in a Phase 2 clinical trial.

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

Business

ATRA is a clinical-stage biopharmaceutical company focused on developing novel therapeutics for serious unmet medical needs, with an initial focus on muscle wasting conditions and oncology.

ATRA's product candidates are biologics targeting myostatin and activin, members of the TGF-ß protein superfamily, which play roles in the growth and maintenance of muscle and many other body tissues.

Amgen history
ATRA's current product candidate portfolio was acquired through licensing arrangements with Amgen in exchange for convertible preferred stock and future milestone payments and royalties.

Through these arrangements, ATRA obtained licenses to patent rights and the ability to use certain proprietary know-how to develop and commercialize a portfolio of seven product candidates.

Under the terms of these agreements, ATRA made an upfront payment of $250,000 and issued 615,384 shares of Series A-1 convertible preferred stock on a combined basis to Amgen.

ATRA is also required to make additional payments of up to $86.0 million to Amgen based upon the achievement of certain development and regulatory approval milestones, as well as additional payments based on achievement of commercial milestones and future net sales of products resulting from development of these product candidates, if any.

Of the $86.0 million, $14.0 million in potential payments relate to milestones for clinical trials.

Product candidates
ATRA's lead product candidate, PINTA 745, is in a Phase 2 clinical trial for PEW in ESRD patients.

ATRA's second product candidate is STM 434, and ATRA expects to enter a Phase 1 clinical study of STM 434 for ovarian cancer and other solid tumors in the second half of 2014.

ATRA has five additional molecules in preclinical development. ATRA intends to license or acquire additional product candidates to develop and commercialize.

ATRA's lead product candidate, PINTA 745, is a peptibody that binds to and inhibits myostatin, a protein that down regulates muscle growth and maintenance.

In a Phase 1 study, PINTA 745 was found to increase muscle mass compared to placebo after one month of weekly dosing, an increase that was statistically significant, indicating that it is more likely than not that the benefit observed in the study was due to drug treatment rather than chance.

ATRA is enrolling a US-based Phase 2 clinical trial to further establish the role of PINTA 745 in building muscle mass, as well as to collect data from corresponding functional muscle tests. This trial is being conducted in patients with ESRD who are also suffering from PEW.

PEW is a major complication of ESRD. A recent study ATRA completed with DaVita Clinical Research, a division of DaVita Healthcare Partners Inc., concluded that more than half of DaVita's dialysis population meet the conditions for PEW and, in comparison to the rest of the group, exhibit worse morbidity and mortality. There is currently no approved therapy for patients suffering from PEW.

ATRA believes PINTA 745 is the only potential therapeutic in clinical development to treat this patient population.

Dividend Policy

No dividends are planned.

Intellectual Property

ATRA seeks composition-of-matter and method-of-treatment patents for each of its product candidates in key therapeutic areas.

ATRA's in-licensed and proprietary patent estate, on a worldwide basis, includes approximately 85 issued patents and 105 pending patent applications, with certain of these pending and issued claims relating to PINTA 745 and STM 434.

These figures include in-licensed patents and patent applications to which ATRA generally holds exclusive commercial rights.

Individual patents extend for varying periods of time depending on the date of filing of the patent application, the priority date claimed and the legal term of patents as determined by the applicable law in the countries in which those patents are obtained. Generally, patents issued from applications filed in the United States are effective for 20 years from the earliest non-provisional filing date.

Competition

While ATRA believes that its innovative technology, knowledge, experience and scientific resources provides it with competitive advantages, ATRA faces potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions and public and private research institutions.

Some of these potential competitors may have a more established presence in the market and significantly greater financial, technical and human resources than ATRA has.

ATRA's commercial opportunity will be reduced or eliminated if its competitors develop and commercialize products that are safer, more effective, have fewer side effects or are less expensive than any products that ATRA may develop.

5% stockholders

Entities affiliated with Kleiner Perkins Caufield & Byers 18.6%

Entities affiliated with Domain Associates 13.2%

Entities affiliated with the Baupost Group LLC 11.8%

Inmobiliaria Carso S.A. de C.V. 9.3%

Celgene Corporation 8.7%

Amgen Inc. 8.6%

Iaac E. Ciechanover 7.4%

Alexandria Real Estate Equities, Inc. 5.3%

Use of proceeds

ATRA expects to net $67 million from its IPO.

As of March 31, 2014, ATRA had cash and cash equivalents and short-term investments of $62.0 million. ATRA currently estimates that it will use the net proceeds from this offering, together with its existing cash and cash equivalents and short-term investments, as follows:

$38.8 million to fund the clinical development and manufacturing of PINTA 745, including the costs of its ongoing pilot Phase 2 clinical trial and its planned confirmatory Phase 2 clinical trial expected to take place thereafter;

$31 million to fund the clinical development and manufacturing of STM 434, including the costs of its initial Phase 1 clinical study, expected to take place through the first half of 2016;

$12.5 million to expand and advance its preclinical research pipeline; and

the remainder for working capital and for other general corporate purposes, which includes funding the costs of operating as a public company and may include acquiring or licensing products, businesses or technologies, although ATRA has no present commitments for any such acquisitions or licenses.

Disclaimer: This ATRA IPO report is based on a reading and analysis of ATRA'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: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.

Source: IPO Preview: Atara Biotherapeutics