ORIC Pharmaceuticals Starts U.S. IPO Effort

Summary

• ORIC Pharmaceuticals has filed to raise $100 million in an IPO, although the final figure may differ.
• The firm is advancing a pipeline of drug treatment candidates for prostate and other cancer conditions.
• ORIC is still very early stage and won't have next trial results until 2021.
• Looking for more stock ideas like this one? Get them exclusively at IPO Edge. Get started today »

Quick Take

ORIC Pharmaceuticals (NASDAQ:ORIC) has filed to raise $86.25 million in an IPO of its common stock, according to an S-1 registration statement.

The company is developing drug treatment candidates for prostate cancer and solid tumors.

ORIC is still in early Phase 1 trials for its lead candidate.

I’ll provide an update when we learn more about the IPO’s pricing and valuation assumptions.

Company and Technology

South San Francisco, California-based ORIC was founded to develop small molecule antagonists of the glucocorticoid receptor to treat various solid tumors.

Management is headed by Chief Executive Officer Mr. Jacob Chacko, M.D., who has been with the firm since May 2019 and was previously CFO at Ignyta, a precision oncology firm that was acquired by Roche Holding (OTCQX:RHHBY) in 2018.

Below is a brief overview video of treatment options for prostate cancer:

Source: Cancer Research UK

The company's lead candidate is ORIC-101, a 'nuclear hormone receptor that mediates responses to glucocorticoid hormones involved in regulating a range of cellular functions, such as metabolism, cell growth and differentiation.'ORIC-101 promises to inhibit certain cancer cell activity and 'block pro-survival signals downstream of its activation that confer resistance to anti-androgen therapies and chemotherapies.'

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

Source: S-1

Investors in the firm have invested at least $178 million and include The Column Group, Topspin Capital, OrbiMed, and EcoR1.

Market and Competition

According to a 2017 market research report by Grand View Research, the market for prostate cancer therapeutics is expected to reach $12 billion in size by 2025.

There are many drugs in various stages of development, some of which are expected to enter the market by 2025; also, some drugs are also going off patent and the market expects providers to develop generic versions quickly thereafter.

Key elements driving this expected growth are a growing incidence of prostate cancer worldwide and increasing numbers and types of treatment options.

Major competitive vendors that provide or are developing treatments include:

• Astellas (OTCPK:ALPMF)

• Sanofi (SNY)

• Dendreon (OTCPK:DNDNQ)

• AstraZeneca (AZN)

• Johnson & Johnson (JNJ)

• Corcept Therapeutics (CORT)

Financial Status

ORIC’s recent financial results are typical of a development stage biopharma firm in that they feature no revenue and significant R&D and G&A expenses associated with advancing its pipeline into and through clinical trials.

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

Source: Company registration statement

As of December 31, 2019, the company had $17 million in cash and $35.6 million in total liabilities. (Unaudited, interim)

IPO Details

ORIC intends to raise $86.25 million in gross proceeds from an IPO of its common stock, although the final amount may be different.

Management says it will use the net proceeds from the IPO as follows:

to fund the development of ORIC-101, including our two ongoing Phase 1b trials of ORIC-101 in combination with (1) enzalutamide in prostate cancer and (2) nab-paclitaxel in advanced or metastatic solid tumors, and the planned Phase 1b/2 dose expansion portion of such trials;to fund our development of ORIC-533; andthe remaining amounts to fund our development of other research and development activities, as well as for working capital and other general corporate purposes.

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

Listed bookrunners of the IPO are JPMorgan (JPM), Citigroup (C), Jefferies and Guggenheim Securities.

Commentary

ORIC is seeking public investment for its development programs, two of which are currently in Phase 1 safety trials.

The trial status for its lead candidate, ORIC-101, is that it has initiated Phase 1 safety trials in combination with Xtandi and with Abraxane and management expects to publish interim data from at least one of these trials in the first half of 2021.

The market opportunity is large and expected to grow as the world’s male population increases and becomes older, increasing the incidence of prostate cancer.

ORIC has no disclosed commercial collaborations, although it is trialing its lead candidate with two other prostate treatments. I like to see a formal collaboration partner for both scientific validation and resource reasons. Also, a number of the firm’s competitors have collaboration agreements, further highlighting their desirability.

JPMorgan is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 46.7% since their IPO. This is a top-tier performance for all major underwriters during the period.

In sum, ORIC is a very early stage firm and won’t have the next set of trial results until 2021.

When we learn more IPO details, I’ll provide an update.

Expected IPO Pricing Date: To be announced.

Analyst’s 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.