Based in Cambridge, MA, Agios Pharmaceuticals (AGIO) scheduled a $75 million IPO with a market capitalization of $441 million at a price range mid-point of $15, for Wednesday, July 24, 2013.
SIx other IPOs were scheduled for the week of July 22. The full IPO calendar can be found at IPOpremium.
S-1 filed July 11, 2013
http://www.sec.gov/Archives/edgar/data/1439222/000119312513288239/d538215ds1a.htm
Manager, Joint Managers: J.P. Morgan; Goldman
Co Managers: Cowen; Leerink Swann
Accumulated deficit of $81.3 million.
Summary
AGIO is a biopharmaceutical company focused on the field of cellular metabolism.
Through March 31, 2013, AGIO has received $141.2 million in payments from Celgene and $37.5 million in equity investments. Celgene (CELG) has a market capitalization of $56 billion.
Conclusion
Based on the Celgene collaboration and the price-to-book ratio of 3.8, the rating is a buy on the IPO.
Business
AGIO is a biopharmaceutical company focused on the field of cellular metabolism, to transform the lives of patients with cancer and inborn errors of metabolism, or IEMs, which are a subset of orphan genetic metabolic diseases.
AGIO singularly focuses its efforts on using cellular metabolism, an unexploited area of biological research with disruptive potential, as a platform for developing potentially transformative small molecule medicines for cancer and IEMs.
AGIO has identified and validated novel and druggable targets in both cancer and IEMs. AGIO filed an investigational new drug application, or IND, for its first product candidate, AG-221, with the U.S. Food and Drug Administration, or FDA, on June 20, 2013.
To date, AGIO has not filed any other INDs, and has not commenced clinical trials for any of product candidates.
Celgene collaboration
In April 2010, AGIO entered into a collaboration agreement with Celgene focused on cancer metabolism. Under the collaboration, AGIO is leading discovery, preclinical and early clinical development for all cancer metabolism programs.
The discovery phase of the collaboration expires in April 2014, subject to Celgene’s option to extend the discovery phase for up to two additional years. Celgene has the option to obtain exclusive rights for the further development and commercialization of certain of these programs, and AGIO will retain rights to the others.
For the programs that Celgene chooses to license, AGIO may elect to participate in a portion of sales activities for the medicines from such programs in the United States. For certain of these programs, AGIO may elect to retain full rights to develop and commercialize medicines from these programs in the United States.
Through March 31, 2013, AGIO has received $141.2 million in payments from Celgene and $37.5 million in equity investments. AGIO is also eligible to receive extension payments, payments upon the successful achievement of specified milestones, reimbursements for certain development expenses and royalties on any product sales.
Lead product candidates
AGIO’s most advanced cancer product candidates, AG-221 and AG-120, which target mutant IDH2 and IDH1, respectively, have demonstrated strong proof of concept in preclinical models and are expected to enter the clinic in mid-2013 and early 2014, respectively
PK deficiency
AGIO has used its proprietary discovery process in its most advanced IEM program—pyruvate kinase deficiency, or PK deficiency, a rare form of hereditary hemolytic anemia. The disease is characterized by mild to severe forms of anemia.
There are no currently available treatments other than supportive care, which includes splenectomy, transfusion support and chelation, which refers to the removal of excess iron from the human body with a therapeutic agent.
AGIO’s lead PK development candidate, AG-348, is a potent, orally available small molecule activator of the PKR enzyme, an isoform of PK that, when mutated, leads to PK deficiency. AGIO’s current plan is to enter clinical trials in patients with PK deficiency in 2014.
Intellectual property
AGIO has established an intellectual property portfolio consisting of over 100 patent applications worldwide, including multiple patent applications directed to lead product candidates, together with trade secrets, know-how and continuing technological innovation.
The technology underlying the pending patent applications directed to lead product candidates has been developed by AGIO and was not acquired from any in-licensing agreement.
The Trustees of the University of Pennsylvania
In August 2012, AGIO entered into a license agreement with The Trustees of the University of Pennsylvania (Penn), in whichPenn granted the Company a worldwide exclusive license to certain intellectual property rights for the development of diagnostic products to detect the metabolism of certain cancers. AGIO is obligated to pay Penn up to $100,000 in milestone payments, contingent upon the issuance of certain patents.
Competition
There are a number of product candidates in preclinical development by third parties to treat cancer and IEMs by targeting cellular metabolism.
These companies include large pharmaceutical companies, including AstraZeneca plc (AZN) , Eli Lilly and Company (ELY) , Roche Holdings Inc. (RHHBY) and its subsidiary Genentech, Inc., GlaxoSmithKline plc (GSK) , Novartis International AG (NVS) , Pfizer, Inc. (PFE) , and Genzyme, a Sanofi (SNY) company.
There are also biotechnology companies of various size that are developing therapies to target cellular metabolism, including Alexion Pharmaceuticals, Inc., BioMarin Pharmaceutical Inc., Calithera Biosciences, Inc., Cornerstone Pharmaceuticals, Inc., Forma Therapeutics Holdings LLC, and Shire Biochem Inc
5% stockholders pre-IPO
Third Rock Ventures, L.P., 23.7%
Entities affiliated with Celgene Corporation, 17%
ARCH Venture Fund VII, L.P., 16.4%
Flagship Ventures Fund 2007, L.P., 16.4%
Entities affiliated with Fidelity Management & Research Company, 9.9%
Use of proceeds
AGIO expects to net $67.5 million from its IPO.
As of March 31, 2013, AGIO had cash, cash equivalents and marketable securities of $115.8 million. AGIO intends to use the net proceeds from this offering and the concurrent private placement, together with existing cash resources, as follows:
• $5 million to fund the costs of phase 1 clinical development of AG-221;
• if AGIO exercises its option to develop and commercialize AG-120 in the United States, $20-25 million to fund IND-enabling costs and share of early development costs for AG-120;
• $20 million to fund the IND-enabling activities and phase 1/2 clinical development of AG-348;
• $20-25 million to fund research and development to advance the pipeline of earlier-stage cancer metabolism and IEM programs; and
• the remainder for working capital and other general corporate purposes.
