IPO Report: Catabasis Pharmaceuticals (CATB)

Francis Gaskins |

Catabasis Pharmaceuticals (CATB) is a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of novel therapeutics based on its proprietary Safely Metabolized And Rationally Targeted, or SMART, linker technology platform. The company is based in Cambridge, MA.

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SEC Documents

Manager, Joint-managers: Citigroup, Cowen and Company
Co-managers: Oppenheimer, Wedbush PacGrow

End of lockup (180 days): December 22, 2015
End of 25-day quiet period: Monday, July 20, 2015

CATB scheduled a $60 million IPO with a market capitalization of $194 million at a price range midpoint of $14 for Thursday, June 25, 2015 on Nasdaq.

Summary

CATB is a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of novel therapeutics based on its proprietary Safely Metabolized And Rationally Targeted, or SMART, linker technology platform.

Valuation

Glossary

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Catabasis Pharmaceuticals (CATB)

$193

no rev

-7.4

2.9

2.9

31%

             

Conclusion

Neutral

P/E of -7.4 indicating significant cash burn relative to market cap

No collaborations

Shareholders may purchase $18mm, 30%

Price to book of 2.9

Business

CATB is a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of novel therapeutics based on its proprietary Safely Metabolized And Rationally Targeted, or SMART, linker technology platform.

CATB’s SMART linker technology platform is based on the concept of treating diseases by simultaneously modulating multiple biological targets in one or more related disease pathways.

CATB engineers bi-functional product candidates that are conjugates of two molecules, or bioactives, each with known pharmacological activity, joined by one of CATB’s proprietary SMART linkers. CATB’s SMART linker conjugates are designed for enhanced efficacy and improved safety and tolerability.

Focus on Rare Diseases

CATB’s initial focus is on treatments for rare diseases, such as Duchenne muscular dystrophy, or DMD. CATB is also developing other product candidates for the treatment of serious lipid disorders.

CATB targets therapeutic areas and specific diseases with significant unmet medical need where CATB believes it will have a competitive advantage.

CATB seeks to develop therapies that modulate multiple targets in the disease pathway.
Orphan Drug Designation

The U.S. Food and Drug Administration, or FDA, has granted CAT-1004 orphan drug designation for the treatment of DMD. CATB holds worldwide rights to CAT-1004.

Pipeline

CATB has applied its SMART linker technology platform to build a development pipeline that includes three clinical-stage product candidates and multiple programs in preclinical development.

CAT-1004 is an oral small molecule that CATB believes has the potential to be a disease-modifying therapy for the treatment of DMD that may be able to regenerate muscle in boys regardless of the underlying dystrophin mutation. DMD is an ultimately fatal genetic disorder involving progressive muscle degeneration.

CAT-1004 is a SMART linker conjugate of salicylate, a non-steroidal anti-inflammatory drug, and the omega-3 fatty acid docosahexaenoic acid, or DHA, a naturally occurring unsaturated fatty acid with anti-inflammatory properties.

CATB designed CAT-1004 to enhance the activity of salicylate and DHA in modulating the NF-kB pathway at multiple points. NF-kB, or nuclear factor kappa-light-chain-enhancer of activated B cells, is a protein that coordinates cellular response to damage, stress and inflammation and plays an important role in muscle health.

CATB believes that CAT-1004 modulates the disease pathway by inhibiting activated NF-kB and reducing the movement of activated NF-kB to the nucleus of the cell.

Activated NF-kB drives muscle degeneration and suppresses muscle regeneration. Chronic activation of NF-kB has been reported in multiple skeletal muscle disorders, including muscular dystrophies, atrophy and inflammatory myopathies.

In animal models of DMD, CAT-1004 inhibited activated NF-kB, reduced muscle inflammation and degeneration and increased muscle regeneration.

Clinical Trials

In Phase 1 clinical trials in adults, CAT-1004 inhibited activated NF-kB and was well tolerated with no observed safety concerns.

CATB plans to initiate patient enrollment in a Phase 1/2 clinical trial of CAT-1004 in boys with DMD in June 2015.

Subject to patient enrollment, CATB expects to report top-line Phase 2 data in late 2016.

If the results from CATB’s Phase 1/2 clinical trial and discussions with regulatory authorities regarding a pivotal trial are positive, CATB intends to initiate a six-month Phase 3 pivotal clinical trial of CAT-1004 in 2017 and seek marketing approval based on this Phase 3 trial.

Intellectual Property

As of April 30, 2015, CATB’s patent estate included 9 issued U.S. patents and over 25 pending U.S. patent applications, 10 issued foreign patents and 100 pending foreign patent applications.

With regard to CAT-1004, CATB has two issued U.S. patents and one allowed U.S. patent application with composition of matter and method of use claims directed to CAT-1004 and its use.

The issued U.S. patents and the allowed U.S. patent application, when issued, are expected to expire in 2029, without taking a potential patent term extension into account.

In addition, CATB has patents that have been granted in Australia, China, Mexico and New Zealand, which are expected to expire in 2029, without taking potential patent term extensions into account, and at least 20 pending patent applications in various other countries and regions in North America, South America, Europe, and Asia, which, if issued, are expected to expire in 2029, without taking potential patent term extensions into account.

Competition

CAT-1004 for Duchenne Muscular Dystrophy

There are currently no therapies approved for the treatment of DMD in the United States.

Although not approved for the treatment of DMD, corticosteroid therapy is often prescribed to treat the inflammation underlying DMD and to delay loss of ambulation.

Marathon Pharmaceuticals has announced that it is conducting clinical trials and preclinical studies to support approval of deflazacort, a corticosteroid, in DMD and that it anticipates filing an NDA for deflazacort with the FDA in 2016.

CAT-2054 for Hypercholesterolemia

There are many widely available products, including statins and cholesterol absorption inhibitors, approved for the treatment of patients with hypercholesterolemia.

The market and development pipeline for cholesterol regulating therapies is especially large and competitive. If CAT-2054 is approved for the treatment of hypercholesterolemia, either as monotherapy or in combination therapies, it will face intense competition from current approved therapies as well as a number of therapeutic approaches in development.

5% Shareholders Pre-IPO

Entities affiliated with SV Life Sciences 25.8%

Clarus Lifesciences II, L.P.         24.9%  

MedImmune Ventures, Inc.         14.8%  

Advanced Technology Ventures VIII, L.P.           10.3%  

Entities affiliated with Lightstone Ventures          6.8%

Michael Ross, Ph.D.      25.8%  

Nicholas Galakatos, Ph.D.         24.9%  

Jean George     17.1%  

Ron Laufer, M.D.           14.8%              

Dividends

No dividends are planned.

Use of Proceeds

CATB expects to receive $54 million from its IPO and use it for the following:

$30.0 million for the clinical development of CAT-1004;

$15.0 million for the clinical development of CAT-2054; and

the remainder for other product candidates, working capital and other general corporate purposes.

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

Companies

Symbol Name Price Change % Volume
CATB Catabasis Pharmaceuticals Inc. 3.47 -0.09 -2.53 98,217

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