Gyroscope Therapeutics Seeks $142 Million In U.S. IPO

Summary

• Gyroscope Therapeutics has filed to raise $142 million in an IPO.
• The firm is developing gene-based treatments for age-related macular degeneration.
• VISN has produced intriguing early stage results, but we don't know the subset patient market size and the U.S. FDA is notoriously slow in approving gene-based therapies.
• I'll watch the IPO from the sidelines.
• Looking for more investing ideas like this one? Get them exclusively at IPO Edge. Learn More »

Photo by Nastasic/E+ via Getty Images

Quick Take

Gyroscope Therapeutics Holdings plc (NASDAQ:VISN) has filed to raise $142 million in an IPO of its American Depositary Shares representing underlying ordinary shares, according to an F-1/A registration statement.

The firm is a clinical stage biopharma developing treatments for blindness.

VISN has produced intriguing early stage trial results but I’m uncertain as to the ultimate target size for its gene therapies as well as the potentially long wait for a slow-moving FDA approval process for gene therapy approaches, so I'll pass on the IPO.

Company & Technology

Hertfordshire, UK-based Gyroscope was founded to advance gene-based therapy treatments for wet and dry age-related macular degeneration.

Management is headed by Chief Executive Officer Khurem Farooq, who has been with the firm since March 2019 and was previously SVP Immunology and Ophthalmology at Genentech.

Below is a brief overview video of age-related macular degeneration:

Source: National Eye Institute, NIH

The firm's lead program, GT005, is being developed to treat the population of patients with geographic atrophy secondary to AMD.

Management expects to provide additional interim Phase 1/2 data during the remainder of 2021, final Phase 1/2 data in 2022 and additional Phase 2 data in 2023.

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

Source: Company SEC Filing

Investors in the firm have invested at least $112 million in equity investment and include Syncona, Forbion, T. Rowe Price Funds and Sofinnova Venture Partners.

Market & Competition

According to a 2020 market research report by GlobalData, the market for treatments for age-related macular degeneration in the nine major markets in 2018 was an estimated $8.6 billion in 2018 and is expected to reach $18.7 billion by 2028.

This represents a forecast CAGR (Compound Annual Growth Rate) of 8.1% from 2019 to 2028.

Key elements driving this expected growth are the entry of longer-acting anti-angiogenic therapies and the launch of products for dry AMD and geographic atrophy [GA], which are two forms of advanced disease for which there are no approved therapies. (Source)

Also, there are currently 11 Phase 3 stage products in development for treatment of AMD.

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

• 4-D Molecular Therapeutics

• Adverum

• REGENXBIO

• Apellis

• Gemini

• Hemera

• IVERIC bio

• NGM Biopharmaceuticals

• Roche

• Others

Financial Status

Gyroscope’s recent financial results are mostly typical of a development stage biopharma. It has received a small amount of revenue but has large R&D and G&A expenses associated with its development efforts.

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

Source: Company registration statement

As of December 31, 2020, the company had $20.9 million in cash and $45.4 million in total liabilities.

IPO Details

Gyroscope intends to raise $142 million in gross proceeds from an IPO of its American Depositary Shares representing underlying ordinary shares, offering 6.75 million ADSs at a proposed midpoint price of $21.00 per ADS.

No existing shareholders have indicated an interest to purchase shares at the IPO price.

Assuming a successful IPO, the company’s enterprise value at IPO (ex. underwriter options) would approximate $343.3 million, excluding the effects of underwriter over-allotment options.

Excluding effects of underwriter options and private placement shares or restricted stock, if any, the float to outstanding shares ratio will be approximately 23.09%.

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

approximately $90.0 million to $130.0 million to advance our lead product candidate, GT005, including to fund our ongoing Phase I/II FOCUS clinical trial, ongoing Phase II EXPLORE clinical trial and our ongoing Phase II HORIZON clinical trial;

approximately $10.0 million to $20.0 million to advance our product candidate, GT011; and

the balance for the development of our other preclinical programs and general corporate purposes, including general and administrative expenses and working capital.

Management’s presentation of the company roadshow is available here.

Listed bookrunners of the IPO are Morgan Stanley, Goldman Sachs and Citigroup.

Commentary

Gyroscope is seeking public investment capital to fund further development of its pipeline of treatments for age-related macular degeneration.

The firm’s lead candidate, GT005, is being developed to treat the population of patients with geographic atrophy secondary to AMD.

The market opportunity for treating all forms of AMD is large and expected to grow at a substantial rate, especially as the global population ages and the incidence of the condition increases.

Management has disclosed no major pharma firm collaboration deals.

The company’s investor syndicate includes a number of well-known biotech venture capital investment firms.

Morgan Stanley is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 32.9% since their IPO. This is a mid-tier performance for all major underwriters during the period.

As for valuation, management is asking IPO investors to pay an Enterprise Value of around $343 million which is well within the typical range for a life science firm at IPO.

The firm’s early trial efforts have led to sharply increased CFI (Complement Factor I) levels in patients, which management believes is a precursor to improving their condition.

While the early trial results have been positive, it is difficult to ascertain the market size of the subset of AMD individuals that would be helped by the firm’s treatment, if successful.

Additionally, VISN’s treatments are gene-based which means a likely very slow approval process by the U.S. FDA., which is pursuing a go-slow approach to approving gene therapies regardless of the disease.

Given the above uncertainties, while I wish the company well, I'll watch the IPO from the sidelines.

Expected IPO Pricing Date: May 6, 2021

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.