IPO Report: Atara Biotherapeutics (ATRA)

Atara Biotherapeutics ($ATRA) is a clinical-stage biopharmaceutical company focused on developing novel therapeutics for serious unmet medical needs, with an initial focus on muscle wasting conditions and oncology. It is headquartered in Brisbane, CA.

Six other companies are scheduled for the week of Oct. 13, 2014. The full IPO calendar is available at IPOpremium.

The manager and co-anager are: Goldman Sachs and Citi

The joint managers is Jefferies & Co.

ATRA scheduled a $75 million IPO with a market capitalization of $291 million at a price range midpoint of $15 for Thursday, Oct. 16, 2014 on the Nasdaq.  SEC filings

Atara Biotherapeutics IPO Report

Overview

ATRA is a clinical-stage biopharmaceutical company focused on developing novel therapeutics for serious unmet medical needs, with an initial focus on muscle wasting conditions and oncology.

Enrolling a Phase 2 clinical trial.

Valuation

Glossary

Conclusion

Neutral

2.4 times book

Tried to IPO last July

Stockholders may buy $35mm, 47%

Business

ATRA is a clinical-stage biopharmaceutical company focused on developing novel therapeutics for serious unmet medical needs, with an initial focus on muscle wasting conditions and oncology.

ATRA’s product candidates are biologics targeting myostatin and activin, members of the TGF-ß protein superfamily, which play roles in the growth and maintenance of muscle and many other body tissues.

Product candidates

ATRA’s lead product candidate, PINTA 745, is in a Phase 2 clinical trial for PEW in end-stage renal disease (ESRD) patients.

ATRA’s second product candidate is STM 434, and ATRA expects to enter a Phase 1 clinical study of STM 434 for ovarian cancer and other solid tumors in the second half of 2014.

ATRA has five additional product candidates in preclinical development and an exclusive option to license several others through an agreement with MSK. ATRA intends to license or acquire additional product candidates to develop and commercialize.

Lead product

ATRA’s lead product candidate, PINTA 745, is a peptibody that binds to and inhibits myostatin, a protein that down regulates muscle growth and maintenance.

In a Phase 1 study, PINTA 745 was found to increase muscle mass compared to placebo after one month of weekly dosing, an increase that was statistically significant, indicating that it is more likely than not that the benefit observed in the study was due to drug treatment rather than chance.

ATRA is enrolling a US-based Phase 2 clinical trial to further establish the role of PINTA 745 in building muscle mass, as well as to collect data from corresponding functional muscle tests.

This trial is being conducted in patients with ESRD who are also suffering from PEW.

PEW is a major complication of ESRD.

A recent study ATRA completed with DaVita Clinical Research, a division of DaVita Healthcare Partners Inc., concluded that more than half of DaVita’s dialysis population meet the conditions for PEW and, in comparison to the rest of the group, exhibit worse morbidity and mortality.

There is currently no approved therapy for patients suffering from PEW.

ATRA believes PINTA 745 is the only potential therapeutic in clinical development to treat this patient population.

In clinical studies conducted of PINTA 745 in men with prostate cancer and in mouse studies in a model of chronic kidney disease, or CKD, conducted with PINTA 745/s, a version of PINTA 745 that was customized for use in mice, several properties well suited for a potential therapeutic for PEW were observed, including:

Reversing muscle loss — PINTA 745 not only stopped muscle wasting, it significantly increased muscle mass after four weeks of treatment.

Anti-inflammatory properties — In an animal model of renal disease, PINTA 745/s exhibited significant anti-inflammatory properties, a factor that ATRA believes will be important due to the critical role that inflammation plays in PEW and the overall declining health of ESRD patients.

Dosing schedule — PINTA 745 is dosed weekly, which conveniently aligns with dialysis treatment schedules.

Dividend Policy

No dividends are planned.

Intellectual Property

ATRA seeks composition-of-matter and method-of-treatment patents for each of its product candidates in key therapeutic areas.

ATRA’s in-licensed and proprietary patent estate, on a worldwide basis, includes approximately 95 issued patents and 171 pending patent applications, with certain of these pending and issued claims relating to PINTA 745 and STM 434.

These figures include in-licensed patents and patent applications to which ATRA generally holds exclusive commercial rights.

Competition

ATRA faces potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions and public and private research institutions.

Some of these potential competitors may have a more established presence in the market and significantly greater financial, technical and human resources than ATRA has.

ATRA’s commercial opportunity will be reduced or eliminated if its competitors develop and commercialize products that are safer, more effective, have fewer side effects or are less expensive than any products that ATRA may develop.

If approved, PINTA 745 or STM 434 would compete with currently marketed drugs and therapies used for treatment of the following indications, and potentially with drug candidates currently in development for the same indications:

Muscle Wasting-Related Indications

There currently are no FDA or EMA approved products for the treatment of PEW in dialysis patients and ATRA is not aware of any product candidates in clinical development for this indication.

However, products are currently marketed or used off-label for the muscle wasting-related indication for which ATRA is developing PINTA 745, and a number of companies are or may be developing new treatments for muscle wasting indications.

The current treatment for PEW and cancer cachexia often involves the administration of readily available nutritional supplements and appetite stimulants including, in some jurisdictions, marijuana.

In addition, there are two commercially available steroids, nandrolone and oxandrolone, that are sometimes prescribed off-label for the treatment of weight loss in cancer patients.

Ovarian Cancer

There are numerous approved products and therapies for ovarian cancer, and a number of companies are or may be developing new treatments for ovarian cancer and other solid tumors.

These therapies, as well as promotional efforts by competitors and clinical trial results of competitive products, could significantly diminish any ability to market and sell STM 434.

Approved drug therapies for ovarian cancer include chemotherapy with platinum compounds such as cisplatin or carboplatin and taxane compounds such as paclitaxel or docetaxel, and hormone therapies including goserelin, leuprolide, tamoxifen, letrozole, anastrozole and exemestane.

5% stockholders

Entities affiliated with Kleiner Perkins Caufield & Byers   18.6%

Entities affiliated with Domain Associates          13.2%

Entities affiliated with DAG Ventures      13.2%

Entities managed by The Baupost Group, L.L.C.             11.8%

nmobiliaria Carso S.A. de C.V.   9.3%

Celgene Corporation      8.7%

Amgen Inc.       8.6%

Isaac E. Ciechanover   7.4%

Alexandria Real Estate Equities, Inc.      5.3%

Isaac E. Ciechanover   7.4%

Joel S. Marcus 5.3%

Beth Seidenberg           18.6%  

Use of proceeds

ATRA intends to use the $67 million in proceeds from its IPO as follows:

$37.1 million to fund the clinical development and manufacturing of PINTA 745, including the costs of its ongoing pilot Phase 2 clinical trial and its planned confirmatory Phase 2 clinical trial expected to take place thereafter;

$25.7 million to fund the clinical development and manufacturing of STM 434, including the costs of its initial Phase 1 clinical study, expected to take place through April 2017;

$13.1 million to expand and advance its preclinical research pipeline; and

the remainder for working capital and for other general corporate purposes, which includes the cost of operating as a public company and the cost of acquiring, evaluating and potentially exercising its exclusive option to license the MSK T-cell therapies and potentially acquiring or licensing other product candidates, businesses or technologies, although ATRA has no present commitments for any such acquisitions or licenses.