IPO Update: Ideaya Biosciences Readies Terms For IPO

About: IDEAYA Biosciences (IDYA)
by: Donovan Jones

IDEAYA Bio has filed proposed terms for its $70 million IPO.

With partner Novartis, the firm is developing a novel treatment for uveal melanoma with potential for a wider target set.

IDYA has an impressive investor list, strong collaboration with Novartis, and the IPO appears reasonably valued.

Quick Take

IDEAYA Biosciences (IDYA) intends to raise $70 million from the sale of its common stock in a U.S. IPO, per an amended registration statement.

The company is developing a pipeline of treatment candidates for solid tumors and other cancers.

IDYA has a strong collaboration partner in Novartis (NVS), an impressive investor syndicate that is supporting the IPO, and a reasonable IPO valuation.

Company And Technology

San Francisco, California-based IDEAYA was founded in 2015 to discover and develop therapeutics for the treatment of oncological diseases.

Management is headed by Founder, President, and CEO Yujiro Hata, who was previously Executive-in-Residence at 5AM Ventures.

The company has developed a proprietary drug target discovery platform and a “Dual CRISPR combinatorial approach for evaluating potential synthetic lethality relationships between potential drug targets and tumor suppressor genes.”

IDEAYA has obtained an exclusive global license to use data from Novartis’ ongoing Phase 1 monotherapy clinical trial of IDE196 in patients with Metastatic Uveal Melanoma [MUM], whose results were announced at the American Association of Cancer Research in April 2019.

IDEAYA’s lead drug candidate is IDE196, a Protein Kinase C [PKC] inhibitor that is currently being developed for the treatment of genetically-defined cancers with the GNAQ or GNA11 gene mutations, which management claims to be very common among MUM incidences.

The firm has filed an Investigational New Drug Application with the US FDA and is planning to initiate a Phase 1/2 clinical trial of IDE196 in patients with solid tumors with the GNAQ or GNA11 mutations.

Below is the current status of the company’s drug development pipeline:

Source: Company registration statement

Investors in IDEAYA Biosciences include 5AM Ventures, Roche Venture Fund, Canaan Partners, GV, Boxer Capital, Perceptive Advisors, WuXi Healthcare Ventures, Biotechnology Value Fund, Alexandria Venture Investments, and Driehaus Capital Management. Source: Crunchbase

Market And Competition

According to a recent market research report by Transparency Market Research, the American Cancer Society had reported a total of 2,730 new cases in the US of uveal melanoma for 2014.

“Uveal melanoma is referred as the cancer of the parts of the eye including the iris choroid and ciliary body. It is the condition in which the tumors arise from the melanocytes residing within the uva responsible for the color of the eye.”

Major competitors that provide or are developing treatments include:

  • Immunocore

  • AstraZeneca (AZN)

  • Clovis (CLVS)

  • Tesaro (GSK)

  • Pfizer (PFE)

  • Agios (AGIO)

  • Celgene (CELG)

  • Artios Pharma

  • Cyteir Therapeutics

Source: Sentieo

Management believes its IDE196 to be “the most advanced small molecule PKC inhibitor for genetically-defined cancers having GNAQ or GNA11 gene mutations in clinical trials.”

Financial Status

IDEAYS’s recent financial results are common for biopharma firms in development stages. The firm has no revenue and significant R&D and G&A expenses associated with advancing its pipeline of treatment candidates.

Below are the company’s financial results for the past two and ¼ years (Audited PCAOB for full years):

Source: Company registration statement

As of March 31, 2019, the company had $79.0 million in cash and $12.3 million in total liabilities (unaudited, interim).

IPO Details

IDEAYA intends to sell 5.0 million shares of common stock at a midpoint price of $14.00 per share for gross proceeds of approximately $70.0 million, not including the sale of customary underwriter options.

Certain existing shareholders have indicated an interest to purchase shares of up to $35.0 million in the aggregate. This is typical for a life science IPO and is a positive valuation signal to prospective IPO investors.

Assuming a successful IPO at the midpoint of the proposed price range, the company’s enterprise value at IPO would approximate $193.7 million.

Excluding effects of underwriter options and private placement shares or restricted stock, if any, the float to outstanding shares ratio will be approximately 25.67%.

Per the firm’s most recent regulatory filing, it plans to use the net proceeds as follows:

approximately $27.0 million to $32.0 million to fund the clinical development of IDE196 (our protein kinase C, or PKC, inhibitor), including potential milestone payments to Novartis, through [i] completion of enrollment and interim data of the Phase 1/2 clinical trial in multiple solid tumor indications based on a tissue-type agnostic basket trial design for patients with solid tumors that have mutations in GNAQ or GNA11, or PKC gene fusions, as well as [ii] completion of preclinical evaluation for potential therapeutic use in NSCLC for patients having tumors with resistance to an EGFR inhibitor mediated by PKC, as well as [iii] completion of preclinical evaluation, and subject to satisfactory results from such preclinical evaluation, initiation of a clinical trial evaluating IDE196 in combination with one or more additional anti-cancer agent[s] in patients with metastatic uveal melanoma;

approximately $20.0 million to $25.0 million to fund the preclinical and clinical development of product candidates in our synthetic lethality pipeline, including MAT2A through initiation of a Phase 1 clinical trial, and for one or more of our Pol-theta, PARG and WRN programs, through lead compound designation and IND-enabling studies, and development activities related to diagnostics associated with our product candidates; and

the balance for early target discovery and validation, including with our synthetic lethality target discovery platform, working capital and general corporate purposes.

Management’s presentation of the company roadshow is not available.

Listed underwriters of the IPO are J.P. Morgan, Citigroup, and Jefferies.

Expected IPO Pricing Date: May 22, 2019.

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.