IPO Preview: Vascular Biogenics

Jul.31.14 | About: Vascular Biogenics (VBLT)

Summary

Clinical-stage biopharmaceutical company committed to the discovery, development and commercialization of first-in-class treatments for cancer and immune-inflammatory diseases.

Existing shareholders have indicated an interest in buying $35 million on the IPO.

Price-to-book value is 3.2.

Based in Or Yehuda, Israel, Vascular Biogenics (VBLX) scheduled a $76 million IPO on the Nasdaq with a market capitalization of $259 million at a price range midpoint of $14 for Thursday, July 31, 2014.

The full IPO calendar is available at IPOpremium

SEC Documents

Manager, Co-Managers: Deutsche Bank Securities, Wells Fargo Securities

Joint Managers: JMP Securities, Needham, Oppenheimer

End of lockup (180 days): Tuesday, January 27, 2015

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

Summary

VBLX is a clinical-stage biopharmaceutical company committed to the discovery, development and commercialization of first-in-class treatments for cancer and immune-inflammatory diseases.

Valuation

Glossary

Accumulated deficit ($mm)

-$110

Per share dilution

.

.

-$9.65

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Valuation Ratios

Mrkt Cap ($mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

2013 yr

Vascular Biogenics

$259

n/a

-14.9

3.2

3.2

29%

Click to enlarge

Conclusion

The rating is neutral.

Existing shareholders have indicated an interest in buying $35 million on the IPO.

3.2 times book value

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

Business

VBLX is a clinical-stage biopharmaceutical company committed to the discovery, development and commercialization of first-in-class treatments for cancer and immune-inflammatory diseases.

VBLX's clinical pipeline is based on two distinct, proprietary platform technologies that leverage the body's natural physiologic and genetic regulatory elements.

To date, VBLX has developed two programs based on these platforms-an oncology program and an anti-inflammatory program.

VBLX's lead product candidate from its oncology program, VB-111, is a gene-based biologic that VBLX is initially developing for recurrent glioblastoma, or rGBM, an aggressive form of brain cancer.

VBLX fast track designation

VBLX has obtained fast track designation for VB-111 in the United States for prolongation of survival in patients with glioblastoma that has recurred following treatment with standard chemotherapy and radiation.

VBLX orphan drug designation

VBLX has also received orphan drug designation in both the United States and Europe.

VBLX planned Phase 3 trial

The FDA has concurred with the design and planned analyses of VBLX's Phase 3 pivotal trial of VB-111 in rGBM pursuant to a special protocol assessment, or SPA. VBLX intends to begin this trial by the end of the first quarter of 2015, subject to the FDA being satisfied with the potency release assay to be used in the trial.

VB-201 Phase 2 clinical trial

VBLX's lead product candidate from its anti-inflammatory program, VB-201, is an oral small molecule VBLX is currently evaluating in Phase 2 clinical trials for psoriasis and for ulcerative colitis. VBLX has completed enrollment of both of these Phase 2 clinical trials and VBLX expects top-line results from these trials in the first quarter of 2015.

VBLX's oncology program is based on its proprietary Vascular Targeting System, or VTS, platform technology, which utilizes genetically targeted therapy to destroy newly formed, or angiogenic, blood vessels.

VBLX believes this technology will allow VBLX to develop product candidates for multiple oncology indications.

VBLX's anti-inflammatory program is based on the use of its Lecinoxoid platform technology. Lecinoxoids are a novel class of small molecules VBLX developed that are structurally and functionally similar to naturally occurring molecules known to modulate inflammation.

VBLX believes its two distinct platform technologies provide it with an opportunity to develop a diversified portfolio of product candidates targeting both orphan indications and large markets.

Dividend Policy

No dividends are planned

Intellectual Property

As of March 14, 2014, VBLX had 108 granted patents and 81 applications pending worldwide for its oncology program and VTS platform technology and 86 granted patents and 86 patent applications pending worldwide for its anti-inflammatory program and Lecinoxoid family of compounds.

Competition

In particular, VB-111 may face competition from currently approved drugs and drug candidates under development by others to treat rGBM. In May 2009, the FDA granted accelerated approval to Avastin (bevacizumab), which is an angiogenesis inhibitor, to treat patients with rGBM at progression after standard first-line therapy.

In addition to bevacizumab, a number of companies are conducting late-stage clinical trials to test targeted drugs focused on angiogenesis inhibition for the treatment of ovarian cancer, including, among others, Amgen's (NASDAQ:AMGN) trebananib, Boehringer Ingelheim's nintedanib and GlaxoSmithKline's (NYSE:GSK) Votrient.

5% stockholders

The Keffi Group VI LLC 24.0%

Aurum Ventures M.K.I. Ltd 23.5%

Persons affiliated with Pitango Ventures 11.7%

Persons affiliated with J.J.D. Holdings 7.9%

Prof. Dror Harats 10.9%

Mr. Jecheskiel Gonczarowski 14.6%

Use of proceeds

VBLX intends to use the $68 million in proceeds from its IPO as follows:

  • $30.0 million to fund clinical development costs of VB-111;
  • $4.5 million to fund development costs of VB-201;
  • $6.5 million for pre-clinical and early clinical development of follow-on Lecinoxoid product candidates;
  • $8.0 million for costs associated with the construction of its VB-111 manufacturing facility;
  • $0.7 million, representing 1% of the net proceeds of this offering, to satisfy a payment obligation triggered upon its initial public offering pursuant to an agreement with Tel Hashomer-Medical Research, Infrastructure and Services Ltd.; and
  • The remainder for working capital and general corporate purposes, including funding the costs of operating as a public company.

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