Gain Therapeutics Aims For $40 Million IPO

Feb. 25, 2021 3:31 PM ETGain Therapeutics, Inc. (GANX)MGTA, MNOV, PASG, PRVL, SMDPY

Summary

  • Gain Therapeutics has filed to raise $40 million in a U.S. IPO.
  • The firm is a preclinical biopharma developing treatments for lysosomal storage disorders.
  • GANX has a number of research collaborations, but is still at a very early stage of development, so maybe more relevant for institutional, long-term hold investors.
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Quick Take

Gain Therapeutics (NASDAQ:GANX) has filed to raise $40 million in an IPO of its common stock, according to an S-1 registration statement.

The firm is a pre-clinical biopharma developing treatment candidates for diseases caused by protein misfolding.

GANX is still at a very early stage of development and the IPO is likely more relevant for long-term institutional investors.

I’ll provide a final opinion when we learn more about the IPO from management.

Company & Technology

Bethesda, Maryland-based Gain was founded to develop drug candidates using an in-licenses platform, the Site-Directed Enzyme Enhancement Therapy system to 'discover novel allosteric sites on misfolded proteins and identify proprietary small molecules that bind these sites and restore protein folding,' potentially treating the diseases.

Management is headed by Chief Executive Officer Eric Richman, who has been with the firm since 2020 and was previously Chief Executive Officer of Tyrogenex and prior to that held various commercial and strategic roles at MedImmune.

Below is a brief overview video of the challenges of living with Morquio syndrome:

Source: Financial Times

The firm's lead candidate targets the GLB1 gene for the potential treatment of Morquio B and GM1 Gangliosidosis.

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

Source: Company SEC Filing

Investors in the firm have invested at least $13.3 million and include 3B Future Health Fund S.A., VitaTech S.A., TiVenture S.A. and individuals.

Market & Competition

According to a 2020 market research report by Coherent Market Insights, the market for treatment for a group of disorders referred to as lysosomal storage disorders is expected to reach nearly $16 billion by 2027.

This represents a forecast CAGR (Compound Annual Growth Rate) of 10.0% from 2020 to 2027.

Key elements driving this expected growth are increased research & development efforts by companies resulting in greater treatment options for individuals over time.

Also, knowledge is growing of the incidence of the disease due to the creation of disease registries to gather prevalence, treatment and management results of the various related diseases.

Major competitive vendors that provide or are developing related treatments include:

  • Axovant Gene Therapies

  • Chiese

  • Ranedis

  • Passage Bio (PASG)

  • MediciNova (MNOV)

  • Plaryx

  • Magenta Therapeutics (MGTA)

  • Prevail Therapeutics (PRVL)

  • Apollo Therapeutics

Financial Status

Gain’s recent financial results are unusual for a preclinical stage biopharma in that they feature revenue, which is from the sublease of their Lugano office space.

Below are the company’s financial results for the past three calendar years:

Source: Company registration statement

As of December 31, 2020, the company had $7.5 million in cash and $3.2 million in total liabilities. (Unaudited, interim)

IPO Details

Gain intends to raise $40 million in gross proceeds from an IPO of its common stock, although the final figure may differ.

No existing shareholders have indicated an interest to purchase shares at the IPO price, although this element may become a feature of the IPO if disclosed in a future filing.

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

to fund expenses to advance the development of our GLB1 programs for our lead product candidates in ongoing preclinical studies and into Phase 1/2 clinical trials for the treatment of Morquio B and GM1 Gangliosidosis;

to fund expenses to advance the development of our GBA1 programs for our lead product candidates, in ongoing preclinical studies and into Phase 1/2 clinical trials for the treatment of neuronopathic Gaucher and GBA1 Parkinson (GBA1+PD) diseases;

to fund expenses to advance research and development activities that relate to all our other preclinical activities, including process development activities related to the advancement of our product candidates and the cost of research and development personnel; and,

the remainder for planned general and administrative expenses, the costs of operating as a public company, working capital and general corporate purposes.

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

Listed bookrunners of the IPO are BTIG, Oppenheimer & Co. and National Securities.

Commentary

Gain is seeking funding to advance its programs through additional development work and ultimately into Phase 1/2 trials.

The firm’s programs seek to treat protein misfolding that creates lysosomal storage disorders.

The market opportunity for this family of diseases is large and expected to grow at 10% CAGR through 2027, a rather high rate of market growth.

The firm has a number of academic collaborations as well as a commercial research collaboration with Sumitomo Dainippon Pharma (OTC:SMDPY).

The company’s investor syndicate includes a number of European investment firms.

BTIG is the lead left underwriter and there is no data available for the firm’s IPO involvement over the last 12-month period.

GANX is still at an extremely early stage of development, so the IPO is in the 'ultra high risk' category.

I’ll provide an update when we learn more about the IPO from management.

Expected IPO Pricing Date: To be announced.

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This article was written by

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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.

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