Welcome to another season of Pharma IPO review. While we maintain that IPO investing is dangerous, there’s no harm knowing what's coming to market. In that spirit, here’s a set of three companies that did launch, or are about to launch, in the US markets. Of the three, we prefer TCDA because it has started late stage trials in CKD patients, and may submit an NDA as early as next year. Previous results were published in peer-reviewed journals and data showed that the trial was successful.
Founded in 2015, MeiraGTx (MGTX) is a New York-based quickly expanding gene therapy specialist company. The clinical stage gene therapy company specialises in developing various novel gene therapy treatments for a range of inherited and acquired disorders. In particular, disorders of the eye and salivary gland and Neurodegenerative Diseases are their core focus of specialization. In ophthalmology, they have four candidates in various clinical stages. Its drug candidates include a number of adeno-associated virus (AAV) vectors that carry processed genes, and are being tested and developed for all three disease areas on which the company focuses. Some of the conditions in which trials moved to Phase 1/2 are retinitis pigmentosa, achromatopsia and xerostomia.
The gene therapy AAV-RPE65 received FDA and EMA designation of orphan status for the treatment of Leber’s Congenital Amaurosis (‘LCA). Retinitis pigmentosa (‘RP) is a group of inherited retinal disorders (‘IRDs) which represent the most common genetic cause of blindness. There are currently no approved treatments for RP. Achromatopsia is a disorder of the retina and is often confused with the other more commonly found color vision deficiency (popularly known as color blindness). In color blindness a person can perceive color but have difficulty in distinguishing between certain colors, such as red and green. Achromatopsia (alternatively known as achromatism), is an autosomal recessive genetic disorder affecting one of the four genes: CNGA3, CNGB3, GNAT2, PDE6C etc The affected person’s condition may be characterized by a partial or total absence of color vision. Those with complete achromatopsia fail to perceive any colors. On the contrary, incomplete achromatopsia is a milder form that allows some color discrimination. Globally an estimated 1 in 30,000 people are affected by this genetic condition. Xerostomia is a disorder of the salivary glands that turns into a chronic and debilitating condition in which saliva production is affected. Among the potential causes are radiation therapy for head and neck cancer and certain autoimmune diseases.
MeiraGTx recently priced its IPO at $15.10, at the middle of the $14-$16 range that the company initially floated. It started trading in NASDAQ with the ticker MGTX. Through the 5M ordinary shares the company raised ~$75M. The amount is a little less than the originally expected $86. Nevertheless, the amount will be necessary at this crucial development stage. Most of its drug candidates are in early phases and the net proceeds will infuse a necessary breadth into the processing of in-license, acquire or investing in additional businesses, technologies, products or assets.
ElectroCore (ECOR) is a bioelectronic medicine company headquartered in Basking Ridge, New Jersey. The company was established in 2005 and is engaged in developing a range of non-invasive vagus nerve stimulation therapies for the treatment of various conditions in neurology and rheumatology. In particular, their lead product gammacore offers unique solutions to migraine patients by offering an alternative to the drug regimen that often fails to meet patient expectation. The hand-held device through which ElectroCore developed the ability to produce vagus nerve stimulation non-invasively (‘nVNS) was considered to be a technological breakthrough of 2010. The company further claims that their introduction of “gammaCore (‘nVNS) has shifted the paradigm by enabling patients to self-administer discrete doses of therapy”.
Their patented nVNS technology administers controlled stimulation of the vagus nerve. Vagus nerve is the longest cranial nerve in the body. A cranial nerve is one (numbered tenth) of the twelve pairs of nerves which connects the brain the directly to various body parts. Unlike the majority of 31 pair of spinal nerves, cranial nerves are not connected to the spinal cord and are responsible for a number of major sensory and motor functions of the body. nVNS can deliver a proprietary signal through the skin to either the right or the left branches of the vagus nerve in the neck. The device has now moved into 2nd generation development and is used in cluster headache as well.
The company developed an impressive IP portfolio of more than 200 patents and patent applications worldwide. This impressive portfolio compared to the small size of the company strengthens the company’s future potential. They also cover many critical areas of the company’s lead candidate and other pipeline technology. After consolidating the company’s five candidates of neurology area in mid-to-advance range of successful trials, the company is moving towards the Pilot trial end-stage of its rheumatology candidates for rheumatoid arthritis and Sjögren's syndrome. Overall outlook of the pipeline offers little uncertainty regarding the company’s projected vision of its achieveables.
Recently, the company set the terms of its upcoming IPO and launched it on June 8. Through the offer the company plans to change 4.3M common stock shares into public ones. Initial seed funding of the company was $30M that was further bolstered by $55M infusion of Series A financing led by Merck Global Health Innovation Fund and Core Ventures. In the most recent round in November 2017, earlier institutions were joined by a number of others like Knoll Ventures, American Investment Holdings to raise another $70M. Latest round of fundraising from the market is expected to bring $65M. Out of this total amount insiders are intent on purchasing $20M of the offering. This fresh infusion will directly go into the last stage of commercialization of the gammaCore device that is expected to fully hit the market in the 3rd quarter this year. According to a 2017 Global Data estimates, by 2026 migraine headache market will touch $8.7B, globally. The IPO estimate was originally fixed at $14 - $16 range and expected to ride the expectation of the commercialization drive that is now in incubation and development for close to a decade.it eventually opened at the mid-range of the expected price at $15.10. The issue will close on June 12.
South San Francisco, CA-based Tricida (TCDA) is a clinical stage biopharma company that is engaged in the discovery and development of therapies addressing renal, metabolic, and cardiovascular diseases. The company was founded in 2013 and was formerly known as Trilypsa, Inc. Company’s lead candidate is Phase 3-stage TRC101, a non-absorbed polymer designed to treat metabolic acidosis (‘MA) by binding to and removing acid from the GI tract. This, in turn, will slow the progression of chronic kidney disease (‘CKD). TRC101 is designed for oral administration via water suspension. It is designed to combine high capacity and high selectivity for binding and removing hydrochloric acid from GI tract. Further, since TRC101 does not deliver sodium or other counter-ions, they do not complicate the treatment of hypertension, cardiovascular disease, heart failure or edema, the usual comorbidities of CKD patients. Phase 1/2 trial of 135 subject was more or less a success and the results were published in the Clinical Journal of the American Society of Nephrology (CJASN). The candidate is currently undergoing a Phase 3 for the treatment of MA in CKD patients. The key efficacy endpoints of Phase 3 study will be based on the change in blood bicarbonate from baseline to the end of treatment. Enrollment of 217 subjects for the trial is now complete and if the results and timeline progression is as expected by the company, the expected NDA marketing application will be in H2 2019.
The company does not have an extended pipeline but CKD in itself is a major concern. Slightly older estimates predict that the prevalence of CKD in adults is projected to increase from current 13.2% to 14.4% in 2020. Accordingly it may be estimated that ~30M people in the United States are afflicted with CKD. The increasing prevalence of diabetes and hypertension increases the incidence of CKD. Currently, CKD represents the ninth leading cause of death in the United States and the annual Medicare expense for CKD including end-stage renal disease (‘ESRD), exceeds $98 billion.
As expected of a company in development and trial stage, YOY figures of net loss are significant and at the current $15M cash burn rate, infusion of funds through the market route will be a necessary fresh infusion to comfortably sustain its upcoming development expenses. Though there is no foreseeable huddle in the path of the upcoming trials leading eventually to the marketing application next year, probably only aggressive investors might be interested to take a call so early in the IPO.
Disclosure: I/we 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 (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.