IPO Report: Blueprint Medicines (BPMC)

Francis Gaskins |

blueprint_images.jpg

Blueprint Medicines (BPMC) is a biopharmaceutical company focused on improving the lives of patients with genomically defined diseases driven by abnormal kinase activation.

Four other companies are scheduled for the week of April 27. The full IPO calendar is available at IPO Premium.

BPMC is based in Cambridge, MA,andscheduled a $115 million IPO on Nasdaq. The with a market capitalization is $398 million at a price range midpoint of $16. The IPO is scheduled for Thursday, April 30, 2015. 

SEC filings

The manager and joint-managers are Goldman Sachs, Cowen and Company. The co-managers are JMP Securities, Wedbush PacGrow.

Blueprint Medicines Valuation

Glossary

Accumulated deficit (mm)

.

.

-$82

     

Per share dilution

.

.

-$10.23

     

 

         

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Blueprint Medicines (BPMC)

$398

no rev

-9.9

2.8

2.8

29%

             

Blueprint Medicines Conclusion

Neutral plus
Drugs for genomically defined diseases

Expects Phase 1 clinical trials in'15

March '15 agreement with ALXN, $37bb market cap

Shareholders not buying on the IPO

P/E of -9.9 indicating moderate cash burn rate relative to market cap

Price-to-book of 2.8, neither high nor low

Glossary:
Systemic Mmstocytosis (SM)
Gastrointestinal Stromal Tumor (GIST)

Blueprint Medicines Business

BPMC is a biopharmaceutical company focused on improving the lives of patients with genomically defined diseases driven by abnormal kinase activation.

BPMC’s approach is to systematically and reproducibly identify kinases that are drivers of genomically defined diseases and to craft drug candidates with therapeutic windows that provide significant and durable clinical responses to patients.

This integrated biology and chemistry approach enables BPMC to drug known kinases that have been difficult to inhibit selectively and also identify, characterize and drug novel kinase targets.

By focusing on genomically defined diseases, BPMC believes that it will have a more efficient development path with a greater likelihood of success.

Blueprint Medicines Research, Development & Commercialization Agreement

In March 2015, BPMC executed a research, development and commercialization agreement with Alexion Pharma Holding (ALXN), $37 billion market cap. The terms of this arrangement contain multiple deliverables

Blueprint MedicinesSmall Molecule Pipeline

Over the past three years, BPMC has developed a robust small molecule drug pipeline in cancer and a rare genetic disease.

One of BPMC’s lead drug candidates is BLU-285, which targets KIT Exon 17 and PDGFRa D842V, abnormally active receptor tyrosine kinase mutants that are drivers of cancer and proliferative disorders.

BLU-285 will initially be developed in for patients with systemic mastocytosis, a myeloproliferative disorder of the mast cells, and defined subsets of patients with gastrointestinal stromal tumors, the most common sarcoma, or tumor of bone or connective tissue, of the gastrointestinal tract.

BPMC’s other lead drug candidate is BLU-554, which targets FGFR4, a kinase that is aberrantly activated and is a driver of disease in a defined subset of patients with hepatocellular carcinoma, the most common type of liver cancer.

Both drug candidates have demonstrated proof of concept in pre-clinical models and BPMC expects to file Investigational New Drug applications, or INDs, in mid-2015 and initiate BPMC’s Phase 1 clinical trials in mid-2015.

BPMC is also developing a drug candidate to target both RET, a receptor tyrosine kinase that can become abnormally activated when a portion of the gene that encodes RET is joined to part of another gene, and RET resistant mutants that BPMC predicts will arise from treatment with first generation therapies.

BPMC believes that its strategy will allow it to deliver transformative drugs to patients while building a fully-integrated biopharmaceutical company.

Blueprint Medicines Overall Market

Approved kinase drugs, such as imatinib, have demonstrated significant benefit to patients and small molecule kinase drugs achieved over $14 billion in 2013 sales.

Despite this success, there is room for further improvement in kinase drug discovery and development. Many of the approved drugs are multi-kinase inhibitors that are not selective for disease drivers.

This results in off-target toxicities that limit dose levels and target inhibition, thereby reducing efficacy.

Further, patients who initially respond to a targeted kinase treatment often relapse due to the development of resistance mutations.

Finally, as of 2014, kinase drugs approved by the U.S. Food and Drug Administration, or FDA, only target less than five percent of the 518 kinases that constitute the kinome.

For many of the known kinases, there is a strong link between genetic alterations in a kinase and disease, including specific forms of cancer and rare genetic diseases. However, the function of the majority of the kinome is unknown.

Taken together, this represents a substantial opportunity for developing novel and transformative drugs for cancer, rare genetic diseases and other disease areas.

Blueprint Medicines Intellectual Property

BPMC files patent applications directed to its drug candidates in an effort to establish intellectual property positions regarding these new chemical entities as well as uses of these new chemical entities in the treatment of diseases.

BPMC also files patent applications directed to novel fusions that BPMC has discovered through its target discovery engine and the use of these fusions in diagnosing and treating disease. As of March 31, 2015,

BPMC owned one issued U.S. patent, 16 pending U.S. patent applications, 41 foreign patent applications pending in a number of jurisdictions, including Australia, Brazil, Canada, China, Europe, Israel, India, Japan, South Korea, Mexico New Zealand, Russia, South Africa, and seven pending Patent Cooperation Treaty, or PCT, patent applications.

A significant portion of BPMC’s pending patent applications pertain to its key discovery programs, specifically novel recurrent fusions.

BPMC’s issued U.S. patent is projected to expire in 2033, and any patents that may issue from its pending U.S. applications would be projected to expire between 2034 and 2036.

Blueprint Medicines Competition

There are a large number of companies developing or marketing treatments for cancer, including many major pharmaceutical and biotechnology companies.

If BLU-285 receives marketing approval for advanced SM, GIST and/or for patients with GIST with the PDGFRa D842V mutation, it may face competition from other drug candidates in development for these indications, including drug candidates in development from AB Science S.A., Plexxikon Inc., a wholly-owned subsidiary of Daiichi Sankyo Company, Limited, Deciphera Pharmaceuticals, LLC, Novartis AG, AROG Pharmaceuticals, Inc. and ARIAD Pharmaceuticals, Inc.

Further, if BLU-554 receives marketing approval for patients with HCC with FGF19 overexpression, it will face competition from sorafenib, the only approved systemic medical therapy for HCC.

In addition, BMPC is aware of potentially competitive drug candidates in development by AstraZeneca plc, Bayer AG, Johnson & Johnson, Novartis AG, Taiho Pharmaceutical Co., Ltd. and Xoma Ltd.

Blueprint Medicines 5% Shareholders Pre-IPO

Third Rock Ventures II, L.P.        41.80%

Beacon Bioventures Fund III Limited Partnership             13.43%

Blueprint Medicines Dividends

No dividends are planned.

Blueprint Medicines Use of Proceeds

BPMC expects to receive $104 million from its IPO and use it for the following:

$35 million to 40 million for its two Phase 1 clinical trials of BLU-285 in SM and GIST, including clinical research outsourcing, drug manufacturing, companion diagnostic development and internal personnel costs;

$20 million to 25 million for its Phase 1 clinical trial of BLU-554 in HCC, including clinical research outsourcing, drug manufacturing, companion diagnostic development and internal personnel costs; and

$40 million for new and ongoing research activities, including for its RET program and its platform with the goal of delivering one IND annually on average.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Comments

Emerging Growth

Beleave Inc.

Beleave Inc is a biotech company. The Company is engaged in the production of medical marijuana under the Marihuana for Medical Purposes Regulations outlined by Health Canada.

Private Markets

Santo Diablo Mezcal

Santo Diablo Mezcal has been created to capitalize on a boom sector of the beverage market currently full of many small unmemorable products by producing one sexy, household, easily recognizable…

Snapwire

A peer-to-Peer authentic photo marketplace disrupting the $10B commercial photography industry.