($XLRN) is a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of novel protein therapeutics for cancer and rare diseases.
XLRN is one of nine IPOs are scheduled for this week, 11 for next week. The full IPO calendar can be found at IPOpremium
XLRN is based in Cambridge, MA, and scheduled a $66 million IPO with a market capitalization of $360 million at a price range mid-point of $14 for Thursday, September 19, 2013.
XLRN's S-1 was filed September 6, 2013. The manager and joint managers are Citigroup; Leerink Swann
Co-Managers are Piper Jaffray; JMP Securities
Summary
To date, operations have been primarily funded by $105.1 million in equity investments from venture investors, $39.2 million in equity investments from partners and $188.9 million in upfront payments, milestones, and net research and development payments from strategic partners.
XLRN was profitable for the six months ended June, 2013, based on on collaboration and licensing revenues.
XLRN has received more than $225.0 million from collaborations with Celgene ($CELG), $60 billion market capitalization; Alkermes (ALKS) $4.5 billion market capitalization; and Shire (SHP) , $21.5 billion market capitalization.
Valuation
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Valuation Ratios |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
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annualizing June 6 mos '13 |
Cap (MM) |
Sls |
Erngs |
BkVlue |
TanBV |
in IPO |
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Acceleron Pharma |
$360 |
4.4 |
12.0 |
5.8 |
5.9 |
18% |
Accumulated deficit: $156 million
Conclusion
Buy XLRN on the IPO.
Business
XLRN is aclinical stage biopharmaceutical company focused on the discovery, development and commercialization of novel protein therapeutics for cancer and rare diseases.
XLRN's research focuses on the biology of the Transforming Growth Factor-Beta (TGF-b) protein superfamily, a large and diverse group of molecules that are key regulators in the growth and repair of tissues throughout the human body.
XLRN is a leader in understanding the biology of the TGF-b superfamily and in targeting these pathways to develop important new medicines.
XLRN's differentiated protein therapeutic candidates have the potential to significantly improve clinical outcomes for patients with cancer and rare diseases.
XLRN has three internally discovered protein therapeutic candidates that are currently being studied in 12 ongoing Phase 2 clinical trials, focused on cancer and rare diseases.
The two most advanced protein therapeutic candidates, sotatercept and ACE-536, promote red blood cell production through a novel mechanism.
Together with collaboration partner, Celgene – $60 billion market capitalization – XLRN is developing sotatercept and ACE-536 to treat anemia and associated complications in patients with b-thalassemia and myelodysplastic syndromes (MDS), red blood cell disorders that are generally unresponsive to currently approved drugs.
The third clinical stage protein therapeutic candidate, dalantercept, is designed to inhibit blood vessel formation through a mechanism that is distinct from, and potentially synergistic with, the dominant class of cancer drugs that inhibit blood vessel formation, the vascular endothelial growth factor (VEGF) pathway inhibitors. XLRN is developing dalantercept primarily for use in combination with these successful products to produce better outcomes for cancer patients.
Celgene
XLRN is developing sotatercept and ACE-536 through exclusive worldwide collaborations with Celgene. As of January 1, 2013, Celgene became responsible for paying 100% of worldwide development costs for both programs. XLRN may receive up to $567.0 million of potential development, regulatory and commercial milestone payments still outstanding and, if these protein therapeutic candidates are commercialized, XLRN will receive a royalty on net sales in the low-to-mid 20% range.
XLRN also will co-promote sotatercept and ACE-536 in North America, if approved, for which XLRN's commercialization costs will be entirely funded by Celgene. XLRN has not entered into a partnership for dalantercept and retains worldwide rights to this program.
To-date Funding
To date, operations have been primarily funded by $105.1 million in equity investments from venture investors, $39.2 million in equity investments from partners and $188.9 million in upfront payments, milestones, and net research and development payments from strategic partners.
Commercialization
XLRN retains co-promotion rights with collaboration partner, Celgene, for both sotatercept and ACE-536 in North America, and under the terms of agreements with Celgene, commercialization costs will be entirely funded by Celgene.
XLRN also currently retains worldwide commercialization rights for its oncology protein therapeutic candidate, dalantercept.
Development Objectives
For sotatercept and ACE-536, XLRN's development strategy, determined in collaboration with Celgene, for both b-thalassemia and MDS is to conduct similar clinical trials with each protein therapeutic candidate in each disease essentially in parallel.
For each disease, XLRN and Celgene will review the data from both studies and determine which, if either, protein therapeutic candidate to move forward into subsequent, pivotal studies.
It is XLRN's goal to initiate the Phase 3 clinical trials for one or both protein therapeutic candidates in one or both of these diseases by the end of 2014 or early 2015.
For dalantercept, XLRN's development strategy is to continue the renal cell carcinoma trial and to initiate during 2014 part two of the trial that compares the combination of dalantercept and axitinib to axitinib alone.
XLRN will also work toward completion of the ongoing single agent trial in head and neck cancer. XLRN expects to initiate, during the third quarter of 2014, additional randomized, controlled trials of dalantercept in cancer patients in combination with an approved VEGF pathway inhibitor.
XLRN is currently planning trials of dalantercept plus sorafenib compared to sorafenib alone in first-line hepatocellular carcinoma (a form of liver cancer), dalantercept plus bevacizumab plus standard therapy compared to bevacizumab plus standard therapy in non-small cell lung cancer, and dalantercept plus bevacizumab plus standard therapy compared to bevacizumab plus standard therapy in colorectal cancer.
Preclinical Pipeline
XLRN is using its discovery platform and knowledge of the TGF-b superfamily to design and evaluate promising new protein therapeutic candidates that inhibit ligands of the TGF-b superfamily. XLRN has preclinical stage protein therapeutic candidates in the pipeline that have shown promising activity in animal models.
Strategic Partnerships
Collaborations with corporate partners have provided significant funding and access to partners' scientific, development, regulatory and commercial capabilities.
XLRN has received more than $225.0 million from collaborations with Celgene , $60 billion market capitalization; Alkermes $4.5 billion market capitalization; and Shire , $21.5 billion market capitalization.
Competition
If either sotatercept or ACE-536 is approved for the treatment of patients with b-thalassemia, it would compete with:
•Red blood cell transfusions and iron chelation therapy, such as Novartis's oral iron chelating agent, Exjade®. XLRN is also aware that Shire is studying a new oral iron chelator in clinical trials.
• Fetal hemoglobin stimulating agents, such as hydroxyurea, which are primarily used to treat patients with anemia from sickle cell disease, are sometimes used to treat patients with b-thalassemia. In addition, HQK-1001, a fetal hemoglobin stimulating agent being developed by HemaQuest Pharmaceuticals, Inc., has completed a Phase 1/2 clinical trial and an investigator sponsored Phase 2 clinical trial in patients with b-thalassemia.
•Hematopoietic stem cell transplant treatment is given to a small percentage of patients with b-thalassemia, since it requires a sufficiently well-matched source of donor cells. Certain academic centers around the world are seeking to develop improvements to this approach.
• Other therapies in development, including gene therapy are being developed by several different groups, including bluebird bio, Inc., Memorial Sloan Kettering Cancer Center, GlaxoSmithKline plc, and Sangamo BioSciences Inc.
MDS
If either sotatercept or ACE-536 is approved for the treatment of patients with MDS, it would compete with the following:
•Recombinant erythropoietin and other erythropoiesis stimulating agents. Although these agents are not approved to treat anemia in MDS, current practice guidelines include the use of erythropoiesis stimulating agents and granulocyte colony stimulating factor agents (G-CSF) to treat patients with MDS. Additionally, Amgen's erythropoiesis stimulating agent, Aranesp®, is currently in Phase 3 clinical trials for treatment of anemia in patients with MDS.
•Red blood cell transfusion and iron chelation therapy, including Exjade®, which is used to treat anemia in patients with MDS.
•Immunomodulators, including Celgene's approved product, Revlimid® (lenalidomide), for the treatment of anemia of certain MDS patients.
•Other therapies in development, including: an oral form of the hypomethylating agent azacitidine, known as CC-486, being developed by Celgene to treat patients with transfusion dependent anemia and thrombocytopenia due to lower risk MDS, which is currently in Phase 3 clinical trials in the United States and Europe; and an anti-cancer therapy being developed by Onconova to treat patients with MDS.
Chronic Kidney Disease
If either sotatercept or ACE-536 is approved for the treatment of anemia in patients with chronic kidney disease, it would compete primarily with erythropoiesis stimulating agents that have been approved to treat these patients for over 20 years.
In 2011, the Centers for Medicare and Medicaid Services (CMS) changed the reimbursement practice for erythropoiesis stimulating agents in chronic kidney disease patients on dialysis, which has led to changes in the way erythropoiesis stimulating agents are used in clinical practice, including decreasing the number of patients treated with erythropoiesis stimulating agents as well as decreasing the average dose and duration of therapy. These changes and the anticipated future introduction of biosimilar erythropoiesis stimulating agents are expected to generate additional price pressure in this market. Additionally, XLRN is aware that Astellas Pharma and Fibrogen are developing oral, small molecule treatments that increase the production of erythropoietin to treat patients with anemia.
Oncology Therapies
XLRN is developing dalantercept to be used in combination with VEGF pathway inhibitors for the treatment of cancer. If dalantercept is approved, it would compete with:
•Other non-VEGF angiogenesis inhibitors in development, which also have the potential to be combined with VEGF pathway inhibitors or used independently of VEGF pathway inhibitors to inhibit angiogenesis. Amgen, Regeneron, MedImmune, OncoMed Pharmaceuticals, Pfizer and Tracon are each developing non-VEGF angiogenesis inhibitors.
•Pfizer's fully human monoclonal antibody to the ALK1 receptor, which is in Phase 2 trials in malignant pleural mesothelioma.
Intellectual property
XLRN's patenting strategy is focused on protein therapeutics. XLRN seeks composition-of-matter and method-of-treatment patents for each such protein in key therapeutic areas. XLRN also seeks patent protection with respect to companion diagnostic methods and compositions and treatments for targeted patient populations.
XLRN's patent estate, on a worldwide basis, includes approximately 75 issued patents and approximately 300 pending patent applications, with pending and issued claims relating to all current clinical stage protein therapeutic candidates, sotatercept, ACE-536 and dalantercept. Of these, approximately 20 issued patents cover the nine receptors for the TGF-b superfamily that XLRN has selected as the core focus of discovery approach. These figures include in-licensed patents and patent applications to which XLRN holds exclusive commercial rights.
5% stockholders pre-IPO
Polaris Venture Partners, and related funds, 15.7%
Venrock Partners, and related funds, 12.4%
Advanced Technology Ventures, and related funds, 10.1%
Celgene Corporation, 12.1%
Flagship Ventures, 10.8%
OrbiMed Advisors LLC, 10.8%
Use of Proceeds
XLRN expects to net $58 million from its IPO.
Proceeds are allocated to continue clinical development of dalantercept, to continue to advance and expand the preclinical research pipeline of protein therapeutic candidates and for working capital and other general corporate purposes.
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