IPO Report: Chiasma (CHMA)

Francis Gaskins  |

Chiasma (CHMA) is a late-stage biopharmaceutical company focused on improving the lives of patients suffering from orphan diseases by developing and commercializing novel oral forms of therapies that are available today only by injection. The company is based in Newton, MA.

Seven other companies are scheduled to IPO for the week of July 13.  The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: Barclays, Cowen and Company

Co-managers: William Blair and Oppenheimer & Co.

End of lockup (180 days): Wednesday, January 13, 2016

End of 25-day quiet period: Tuesday, August 11, 2015

CHMA scheduled a $75 million IPO with a market capitalization of $308 million at a price range midpoint of $14 for Thursday, July 16, 2015 on Nasdaq.

Chiasma (CHMA) IPO Summary

CHMA is a late-stage biopharmaceutical company focused on improving the lives of patients suffering from orphan diseases by developing and commercializing novel oral forms of therapies that are available today only by injection.

Chiasma (CHMA) IPO Valuation


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Chiasma (CHMA)


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Chiasma (CHMA) IPO Conclusion

Neutral, but worth a shot

Oral therapies to replace injectables

Shareholders may purchase $30mm, 39% of the IPO

2.4 times book

P/E of -18, indicated moderate cash burn relative to market cap

Roche terminated license agreement after paying $85mm

Chiasma (CHMA) Business

CHMA is a late-stage biopharmaceutical company focused on improving the lives of patients suffering from orphan diseases by developing and commercializing novel oral forms of therapies that are available today only by injection.

Oral Therapies

Using its proprietary Transient Permeability Enhancer, or TPE, technology platform, CHMA seeks to develop oral therapies that eliminate the significant limitations and burdens generally associated with existing injectable therapies.

Roche Terminated Agreement

In July 2014, Roche terminated the license agreement and the April 2014 agreement. Upon termination, Roche returned all rights granted under the agreements. Subsequent to the termination, CHMA  purchased from Roche active pharmaceutical ingredients, or API, to continue the development and manufacturing of oral octreotide, together with Roche’s proposed trade name for oral octreotide, for an aggregate amount of $5.1 million, payable in three annual installments of $1.7 million in January 2016, January 2017 and January 2018.

Had received $85mm from Roche.

Completed Phase 3 Trial

CHMA has completed a multinational Phase 3 clinical trial of its most advanced TPE platform-based product candidate, oral octreotide, for the treatment of acromegaly, a condition that results in the body’s production of excess growth hormone.

Octreotide is an analog of somatostatin, a natural inhibitor of growth hormone secretion.

CHMA believes that its lead product candidate, if approved by regulatory authorities, will be the first somatostatin analog available for oral administration.

Planned Additional Phase 3 Clinical Trial

for oral octreotide for the treatment of acromegaly to support approval in the European Union, Phase 2 clinical trials for oral octreotide for the treatment of neuroendocrine tumors and other indications

Orphan Status

CHMA’s oral octreotide product candidate has been granted orphan designation in the United States and the European Union for the treatment of acromegaly.

CHMA submitted a new drug application, or NDA, to the U.S. Food and Drug Administration, or FDA, on June 15, 2015, seeking approval for the marketing and sale of oral octreotide for the maintenance therapy of adult patients with acromegaly.

The FDA has 60 days after receipt of the NDA to preliminarily review and determine if the application is sufficiently complete to permit a substantive review and meets the threshold for filing. In light of its clinical data and feedback from patients and healthcare providers, CHMA believes that oral octreotide, if approved, could become a new standard of care in acromegaly.

Acromegaly is a condition caused by a benign tumor of the pituitary gland that releases excess growth hormone, or GH, which in turn elevates insulin-like growth factor 1, or IGF-1.

These elevated hormone levels result in a number of painful and disfiguring symptoms, including some acute, such as headaches, joint pain and fatigue, and some long-term, such as enlarged hands, feet and internal organs, as well as altered facial features.

If not treated promptly, acromegaly can lead to serious illness and is associated with premature death, primarily due to cardiovascular disease.

Mortality Rate

According to data published by the Mayo Clinic in 2013, the mortality rate of people afflicted by acromegaly who go untreated is two to three times higher than that of the general population.

Recent data from a published study presented at the Endocrine Society’s Annual Meeting in 2015 suggest that the global prevalence of acromegaly may be between 85 and 118 cases per million people.

The current standard of care for patients diagnosed with acromegaly consists of lifelong, once-monthly injections of an extended release somatostatin analog, primarily octreotide or lanreotide.

These products contain a viscous formulation and are typically administered by a healthcare professional with large-gauge needles into the muscle or deep subcutaneously, that is, deeply under the skin.

While injectable somatostatin analogs are generally effective at reducing GH and IGF-1 levels and therefore providing disease control, the injections are associated with significant limitations and patient burdens, including suboptimal symptom control, pain, injection-site reactions and other injection-related side effects, inconvenience, lost work days and emotional issues.


The worldwide market for injectable somatostatin analogs is approximately $2.0 billion annually, of which approximately $730 million represents annual sales for the treatment of acromegaly.

Chiasma (CHMA) Intellectual Property

As of March 31, 2015, CHMA’s patent portfolio included two patents issued in the United States; patents issued in foreign jurisdictions; patent applications pending in the United States; and patent applications pending in various foreign jurisdictions.

These patents and patent applications include narrow and broad claims directed to octreotide compositions formulated with CHMA’s TPE technology; capsules containing such compositions; methods of treatment using such compositions; and methods of making various compositions with CHMA’s TPE technology.

One patent family that CHMA owns includes two issued U.S. patents and one pending patent application with claims directed to capsules containing octreotide compositions, and methods of treating various conditions with related octreotide compositions.

Other patents in this family have issued in Hong Kong, Japan, New Zealand, South Africa, and the United Kingdom, and patent applications are pending in other jurisdictions, including Brazil, Canada, China, Europe, Israel, Korea, Mexico, Russia, Australia, and Japan. Patents in this family are expected to expire in 2029, absent any adjustments or extensions.

Chiasma (CHMA) Competition

CHMA’s potential competitors include primarily large pharmaceutical, biotechnology companies and specialty pharmaceutical companies.

Key competitive factors affecting the commercial success of oral octreotide and any other product candidates CHMA may develop are likely to be efficacy, safety and tolerability profile, reliability, convenience of administration, price and reimbursement.

The current treatment options for patients suffering from acromegaly all involve injectable therapies.

Novartis markets octreotide LAR, which is administered monthly and intramuscularly using a large gauge needle.

Ipsen markets lanreotide, another long-acting analog of somatostatin, like octreotide, which is administered monthly using a deep subcutaneous injection.

Both therapies, which are currently the first drug treatment options for patients, involve side effects related to the injections and inconvenience due to the timing and requirements of the injections.

For patients not controlled on these somatostatin analogs, Pfizer markets pegvisomant daily injections and Novartis also markets pasireotide LAR, which is another somatostatin analog administered via intramuscular injection.

Pegvisomant daily injections and pasireotide LAR are significantly more costly than injectable octreotide and lanreotide.

The label for pasireotide LAR includes a warning about hyperglycemia and diabetes, which can sometimes be severe.

The label advises healthcare professionals administering pasireotide LAR to monitor glucose levels periodically during therapy and to monitor glucose levels more frequently in the months that follow initiation or discontinuation of therapy and following dose adjustment.

CHMA is aware of other companies involved in early-stage nonclinical and clinical studies of similar somatostatin analogs, but all involve administration via injection.

Chiasma (CHMA) 5% Shareholders Pre-IPO

Affiliates of MPM Capital           39.4%

Affiliates of Fidelity Securities  15.9%    

Abingworth Bioventures V LP     15.2%    

Affiliates of 7 Med Health Ventures LP   13.3%    

Affiliates of F2 Capital    11.2%   

ARCH Venture Fund VI, L.P.      7.8%      

Chiasma (CHMA) Dividends

No dividends are planned.

Chiasma (CHMA) IPO Use of Proceeds

CHMA expects to receive $67 million from its IPO and use it for the following:

$32.0 million to build its corporate infrastructure, including its U.S. sales and marketing operations, to support the commercial launch of oral octreotide in the United States for the treatment of acromegaly;

$15.0 million to initiate an additional Phase 3 clinical trial of oral octreotide to support regulatory approval in Europe for the treatment of acromegaly; and

$3.0 million to initiate a Phase 2 clinical trial of oral octreotide for the treatment of neuroendocrine tumors.


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



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