IPO Report: Celladon (CLDN)

Francis Gaskins |

Celladon (CLDN) is a clinical-stage biotechnology company applying its leadership position in the field of calcium dysregulation by targeting SERCA enzymes to develop novel therapies for diseases with tremendous unmet medical needs.

Nine other operating company IPOs scheduled for this week. The full IPO calendar can be found at IPOpremium.

Manager, Joint managers: J.P. Morgan, Barclays.  Co-Managers: Stifel, Wedbush PacGrow Life Sciences.  S-1 filed October 31, 2013

CLDN scheduled a $75 million IPO on Nasdaq with a market capitalization of $257 million at a price range midpoint of $15 for Thursday, November 14, 2013.

Overview

Pfizer, Novartis & J&J are stockholders.

CLDN believes that its gene therapy approach to modulating SERCA2a overcomes the issues encountered by previous efforts and has the potential to provide transformative disease-modifying effects with long-term benefits in patients with heart failure.

SERCA2a was scientifically validated as a molecular target for heart failure in the 1990s and became a focus of internal discovery efforts for many large pharmaceutical companies. However, to date, no other company has been successful in targeting SERCA2a using traditional discovery methods.

CLDN lost $14 million for the nine months ended September 2013, and has an accumulated deficit of $106 million.

Valuation

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

Annualizing Sept 9 mos

Cap (mm)

Sls

Erngs

BkVlue

TanBV

in IPO

Celladon (CLDN)

$257

no rev

-13.7

2.9

2.9

29%

 

 

 

 

 

 

 

SCORECARD

 

Mgt

Market

Market Do-

Proprie-

Total

1-5, 5 is high

 

 

Grwth

mination

tary

rating

20 is perfect

 

2

2.5

0

1.5

C, 6

 

Glossary

Pre-IPO grade-score summary
http://gaskinsco.com/scr-rate.htm
Many IPOs in today’s environment are graded C+ and scored 7.
If the pre-IPO grade is below C+ or the score is below 7,
then our analysts may have some concerns about the company’s
outlook and/or its market segment.
If the pre-ipo grade is above C+ or the score is above 7,
then our analysts believe the company’s overall business outlook is very favorable.
C = unprofitable, C+ = profitable

Recommendation

Because CLDN

  • successfully completed a phase 2a clinical trial,
  • is preparing for a phase 2b trial
  • appears to have first mover advantage and
  • stockholders include Pfizer, Novartis & J&J
  • but will be losing money for a long time

the rating on CLDN is neutral.

Business

CLDN is a clinical-stage biotechnology company applying its leadership position in the field of calcium dysregulation by targeting SERCA enzymes to develop novel therapies for diseases with tremendous unmet medical needs.

Sarco/endoplasmic reticulum Ca2+-ATPase, or SERCA, enzymes are a family of enzymes that play an integral part in the regulation of intra-cellular calcium in all human cells.

Calcium dysregulation is implicated in a number of important and complex medical conditions and diseases, such as heart failure, which is a clinical syndrome characterized by poor heart function, resulting in inadequate blood flow to meet the body’s metabolic needs, as well as diabetes and neurodegenerative diseases.

CLDN’s therapeutic portfolio for diseases characterized by SERCA enzyme deficiency includes both gene therapies and small molecule compounds. MYDICAR, CLDN‘s most advanced product candidate, uses gene therapy to target SERCA2a, which is an enzyme that becomes deficient in patients with heart failure.

SERCA2a was scientifically validated as a molecular target for heart failure in the 1990s and became a focus of internal discovery efforts for many large pharmaceutical companies. However, to date, no other company has been successful in targeting SERCA2a using traditional discovery methods.

CLDN believes that its gene therapy approach to modulating SERCA2a overcomes the issues encountered by previous efforts and has the potential to provide transformative disease-modifying effects with long-term benefits in patients with heart failure. In addition, CLDN has identified a number of potential first-in-class compounds addressing novel targets in diabetes and neurodegenerative diseases with its small molecule platform of SERCA2b modulators.

Clinical trials

CLDN is the first company to enter clinical development with a product candidate, MYDICAR, that selectively targets SERCA2a. CLDN refers to its Phase 1 trial and Phase 2a trial of MYDICAR together as CLDN’s CUPID 1 trial.

In Phase 2a of CLDN’s CUPID 1 trial, 39 patients with systolic heart failure, which is caused by the inability of the heart to pump blood efficiently due to weakening and enlargement of the ventricles, were enrolled in a randomized, double-blind, placebo-controlled trial, where MYDICAR was found to be safe and well-tolerated, reduced heart failure-related hospitalizations, improved patients’ symptoms, quality of life and serum biomarkers, and improved key markers of cardiac function predictive of survival, such as end systolic volume.

Based on these results, as well as CLDN’s previous preclinical studies and clinical trials, CLDN advanced MYDICAR to an approximately 250-patient randomized, double-blind, placebo-controlled international

Phase 2b trial in patients with systolic heart failure, which CLDN refers to as CUPID 2. CLDN expects to complete enrollment of CUPID 2 in the first half of 2014 and announce results in mid-2015. If successful, these results, along with other studies, will form the basis for regulatory submissions for approval with the United States Food and Drug Administration, or FDA, and European Medicines Agency, or EMA.

In 2012, CLDN obtained a Special Protocol Assessment, or SPA, whereby the FDA agreed to use time-to-multiple heart failure-related hospitalizations as the primary endpoint for a MYDICAR Phase 3 pivotal trial. CLDN’s ongoing CUPID 2 trial uses a similar clinical protocol with identical endpoints as agreed to in the SPA.

 

Intellectual property

CLDN is the owner or licensee of a portfolio of patents and patent applications and possess substantial know-how and trade secrets which protect various aspects of its business.


The patent families comprising CLDN’s patent portfolio are primarily focused on MYDICAR for the treatment of heart failure and are generally directed to certain genes, AAV vectors and methods of delivering such AAV vectors to cells, methods of delivery to myocardial cells and processes to manufacture its product candidates.

CLDN intends to leverage the intellectual property surrounding MYDICAR, together with the 12 years of available regulatory exclusivity that CLDN expects to receive under the Biologics Price Competition and Innovation Act, as an important component of its business strategy.

 

Competition

Some of the pharmaceutical and biotechnology companies CLDN expects to potentially compete with include Renova Therapeutics, NanoCor Therapeutics, Juventas Therapeutics, VentriNova and Beat BioTherapeutics.

Renova, Beat BioTherapeutics and Juventas are in the clinical stages of development with their gene therapy products targeting moderate to advanced heart failure. Renova is using adenovirus serotype 5 encoding human adenylyl cyclase type 6 in a Phase 1/2 trial, while Juventas is enrolling a Phase 2 trial with its product candidate JVS100, which is a non-viral plasmid that encodes for stromal cell-derived factor-1 (SDF-1).

NanoCor (BNP delivery of I1), VentriNova (cyclin A2), and Beat BioTherapeutics (AAV/R1R2) are in the preclinicaltesting of their gene therapy product candidates for the treatment of heart failure.

 

5% stockholders

Entities affiliated with Enterprise Partners 15.1%

Pfizer Inc. 13.1%

Lundbeckfond Invest A/S 13%

Entities affiliated with Novartis Bioventures Ltd. 11/6%

Johnson & Johnson Development Corporation 101.%

GBS Bioventures IV 8.3%

Entities affiliated with MPM Capital 8%

Entities affiliated with Venrock Partners 7.7%

H&Q Healthcare Investors and H&Q Life Sciences Investors 7.3%

Coöperatief LSP IV UA 7.3%


Use of proceeds

CLDN expects to net $67.2 million from its IPO.  Proceeds are allocated as follows:

$53.0 million to fund research and development activities, including internal salaries and external costs, related to seeking regulatory approval for MYDICAR for the treatment of systolic heart failure:

$6.0 million to fund research and development activities related to MYDICAR for other indications;

$2.0 million to fund research and development activities related to CLDN’s SERCA small molecule program; and the remainder to fund working capital and general corporate purposes.

Financials

 

Celladon

CLDN, C, 6

 

 

 

 

Post IPO shares: 17mm

Biotech

 

 

 

 

 

IPO Mkt

San Diego, CA

 

 

 

 

 

Cap (mm)

 

2012

Sept 9 mos '12

Sept 9 mos '13

 

$257

Loss (mm)

-$15.9

-$12.0

-$13.9

 

 

@$15

 

 

 

 

 

 

 

Accumulated deficit (mm)

 

 

-$106

 

 

 

 

 

 

 

 

 

 

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

Annualizing Sept 9 mos

Cap (mm)

Sls

Erngs

BkVlue

TanBV

in IPO

Celladon (CLDN)

$257

no rev

-13.7

2.9

2.9

29%

 

 

 

 

 

 

 

SCORECARD

 

Mgt

Market

Market Do-

Proprie-

Total

1-5, 5 is high

 

 

Grwth

mination

tary

rating

20 is perfect

 

2

2.5

0

1.5

C, 6

 

Glossary

Pre-IPO grade-score summary
http://gaskinsco.com/scr-rate.htm
Many IPOs in today’s environment are graded C+ and scored 7.
If the pre-IPO grade is below C+ or the score is below 7,
then our analysts may have some concerns about the company’s
outlook and/or its market segment.
If the pre-ipo grade is above C+ or the score is above 7,
then our analysts believe the company’s overall business outlook is very favorable.
C = unprofitable, C+ = profitable

 

 

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
JNJ Johnson & Johnson 110.92 -0.18 -0.16 5,506,269
CLDN Celladon Corp n/a n/a n/a n/a
PFE Pfizer Inc. 30.90 -0.30 -0.95 28,190,514
NVS Novartis AG 67.48 -1.14 -1.66 4,510,317
IHREF iShares III Plc Accum Shs 34.60 0.00 0.00 0

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