IPO Report: NantKwest (NK)

Francis Gaskins |

NantKwest (NK) NK is a pioneering clinical-stage immunotherapy company focused on harnessing the power of the innate immune system by using the natural killer cell to treat cancer, infectious diseases and inflammatory diseases. The company is based in Cardiff-by-the-Sea, CA.

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

SEC Documents

Manager, Joint-managers: BofA Merrill Lynch, Citigroup, Jefferies, Piper Jaffray
Co-managers: MLV & Co.

End of lockup (180 days):
End of 25-day quiet period:

NK scheduled a $151 million IPO with a market capitalization of $1.7 billion at a price range midpoint of $21.50 for Tuesday, July 28, 2015 on Nasdaq.

NantKwest IPO Summary

NK is a pioneering clinical-stage immunotherapy company focused on harnessing the power of the innate immune system by using the natural killer cell to treat cancer, infectious diseases and inflammatory diseases.

NantKwest IPO Valuation


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Valuation Ratios

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% offered in IPO

NantKwest (formerly Conkwest) (NK)









Next generation immunotherapy

"living drugs in a bag'

Shareholders may purchase $72mm, 48% of the IPO

Offering 9%, relatively low %

P/E of -12.5, indicating moderage cash burn relative to market dap

Q1 loss of -33mm

Price to book of 7.9, Per share dilution -$18.59

15 employees

NK is a pioneering clinical-stage immunotherapy company focused on harnessing the power of the innate immune system by using the natural killer cell to treat cancer, infectious diseases and inflammatory diseases.

Natural killer
Natural killer, or NK, cells are the body’s first line of defense due to their innate ability to rapidly seek and destroy abnormal cells, such as cancer or virally-infected cells, without prior exposure or activation by other support molecules required to activate adaptive immune cells such as T-cells.

Potential Advantages of the aNK Platform over T-Cell and Other Immunotherapies
The immune system has two components: innate immune cells, such as NK cells, which are always switched on to attack diseased cells, and adaptive immune cells, such as T-cells, which are mobilized to mount a delayed response.

NK's proprietary aNK platform is specifically designed to potentially address many of the limitations associated with current adaptive autologous cellular immunotherapies, including the benefits highlighted below.

NK believes key limitations of adaptive autologous immunotherapy include the need to retrieve non-compromised immune cells from a cancer patient and the requirement for a complex and costly manufacturing process to develop the therapy.

As a consequence of this need to harvest active T-cells, current Phase I clinical trials for autologous CAR-T cell therapies in large part enroll patients from highly selected, advanced stage disease in hematological cancers.

In contrast, NK's allogeneic, “off-the-shelf” NK cells do not rely on the patient’s own immune system, which is often compromised, to achieve their therapeutic effect.

Change the current paradigm of cancer care
NK believes that its proprietary NK cell line, coupled with its planned integrated discovery ecosystem, uniquely positions NK to implement precision cancer medicine and potentially change the current paradigm of cancer care by leveraging the advances that have evolved during the past decade and addressing newly discovered challenges of cancer.

NK believes that many recent advances in cancer treatments have not adequately addressed the heterogeneity of tumor cells, the large mutation load per tumor cell identified by advanced genomics sequencing technologies, and the resistance of the cancer stem cell to chemotherapy.

Cancer is only recently understood to be a complex of rare diseases, with hundreds of patient-specific, cancer-promoting mutated proteins, some known and many more unknown called neoepitopes. Identifying and targeting these mutated proteins is NK’s strategy to overcome the challenges of cancer in the era of genomics, transcriptomics and immuno-oncology.

NK believes neoepitopes, which are newly discovered antigens selectively expressed on the cancer cells and not on the essential normal tissue, represent large untapped targeting opportunities for immune effector cells such as NK’s activated NK cells.

Phase 1 clinical trials
Safety studies of aNK cells have been conducted in multiple Phase I clinical trials for a variety of bulky hematological cancers and solid tumors enrolling over 40 patients to date, with encouraging evidence of activity and durable remissions.

Based on these clinical trials, NK plans to develop the therapeutic applications of this aNK platform through molecular engineering of aNK cells designed to leverage the multiple modes of killing available to aNKs, including antibody-mediated killing, haNK platform, and antigen targeted killing, NK's  taNK platform

NK plans to use the data from the Phase I clinical trials of aNK cells conducted to date to serve as the foundation of the development strategy for three distinct modes of tumor cell killing, each with its own attributes, targeted therapeutic areas and pipeline

Planned trials
NK plans to initiate Phase I/II clinical trials for its CD33.taNK product candidate for acute myeloid leukemia, or AML, and PDL1.taNK product candidate for bulky hematological cancers and solid tumors, in 2016.

NKis also  planning to advance a broad pipeline of aNK, haNK and taNK product candidates with the goal of addressing a wide spectrum of diseases ranging from orphan diseases to more prevalent indications

Multiple Modes of Tumor Cell Killing.
NK’s immuno-oncology NK platform has multiple modes to potentially induce cell death against the tumor or infected cell by:

(1) direct killing by binding to stress ligands expressed by the diseased cell with the release of toxic granules directly into the tumor cell;

(2) antibody mediated killing by binding to antibodies administered in combination and enhancing the cancer killing effect of the administered antibody, enabling targeted cell killing through antibody dependent cellular cytotoxicity, or ADCC; and

(3) target activated killing by binding to known or newly discovered tumor-specific antigens expressed on the surface of tumor cells and inducing cell death by the release of toxic granules directly into the tumor cell, by the release of cytokines and chemokines which recruit additional innate and adaptive immune responses and by the recruitment of cytotoxic T-cells.

By implementing an integrated discovery ecosystem and leveraging these multiple modes of NK killing of abnormal cells, NK believes it is uniquely positioned to potentially address a broad range of known and unknown cancer-promoting mutated proteins and to transform clinical cancer care.

NK’s targeted therapeutic areas include:
(1) cancer, focusing on bulky hematological cancers and solid tumors as well as cancer stem cells,

(2) infectious diseases, including viral, fungal and bacterial infections, and

(3) inflammatory diseases, ranging from rare inherited diseases to more prevalent autoimmune disorders.

Intellectual property
NK has developed and in-licensed numerous patents and patent applications and NK possesses substantial know-how and trade secrets relating to the development and commercialization of NK cell-based immunotherapy product candidates, including related manufacturing processes and technology.

As of the date of the SEC filing, NK’s owned and licensed patent portfolio consists of two licensed U.S. issued patents, two licensed U.S. pending patent applications, one owned U.S. issued patent, and approximately 28 owned U.S. pending patent applications covering certain of NK’s proprietary technology, inventions, and improvements and its most advanced product candidates, as well as approximately 16 licensed patents and eight owned patents issued in jurisdictions outside of the United States, five licensed patent applications and three owned patent applications pending in jurisdictions outside of the United States that, in many cases, are counterparts to the foregoing U.S. patents and patent applications, as well as an additional three pending Patent Cooperation Treaty, or PCT, patent applications.

For example, these patents and patent applications include claims directed to:

 Natural Killer Cell Lines and Methods of Use;

 Genetically Modified Human Natural Killer Cell Lines;

 Treatment of Viral and Bacterial Diseases using Natural Killer Cell Lines;

 Treatment of Specific Diseases using Natural Killer Cell Lines;

 Treatment of Cancer using Natural Killer Cell Lines;

 Protocol and Media for Storage and Transport of NK-92 Cell Line; and

 Combination Therapy using Natural Killer Cell Lines.

NK’s aNK, haNK and taNK product candidates will compete with other cell-based immunotherapy approaches using T- and dendritic cells.

NK is aware of companies developing product candidates focused on NK cells.

These companies include Bristol-Myers Squibb, Celgene Corporation and Innate Pharma.

Companies that are currently focused on T-cell based treatments include Adaptimmune Limited, Amgen Inc., Bellicum Pharmaceuticals, Inc., bluebird bio, Inc., Celgene Corporation, Cellectis SA, GlaxoSmithKline plc, Intrexon Corporation, Juno Therapeutics, Inc., Kite Pharma, Inc., Novartis AG, Pfizer Inc. and Ziopharm Oncology, Inc.

There is currently one approved dendritic cell-based cancer vaccine, PROVENGE, which is marketed by Valeant Pharmaceuticals for the treatment of metastatic castrate-resistant prostate cancer.

Other companies focused on developing dendritic cell-based product candidates include Argos Therapeutics, Inc., Biovest International, Inc., ImmunoCellular Therapeutics, Ltd., Immune Design, Inc., Inovio Pharmaceuticals, Inc., Intrexon Corporation and Northwest Biotherapeutics, Inc.

5% shareholders pre-IPO
Cambridge Equities, LP              57.99%

Sorrento Therapeutics, Inc.  8.03%

Bonderman Family Limited Partnership   6.41%

Patrick Soon-Shiong, M.D., FRCS (C), FACS     62.98%            

Henry Ji, Ph.D.              8.17%              

No dividends are planned.

Use of proceeds
NK expects to receive $137 million from its IPO and use it for the following:

$6.0 million to fund expenses in connection with its Phase II clinical trial for its aNK product candidate for Merkel cell carcinoma, which NK expects will be sufficient to fund the clinical trial;

$10.0 million to fund expenses in connection with its planned Phase I/II clinical trial for Rituxan-haNK for solid tumors, which NK expects will be sufficient to fund the clinical trial;

$14.0 million to fund expenses in connection with its planned Phase I/II clinical trials for CD33.taNK for acute myeloid leukemia and PDL1.taNK for solid tumor hematological cancers, which NK expects will be sufficient to fund the clinical trials;

$10.0 million to establish its planned manufacturing facility and processes and the hiring of additional personnel; and

the remaining amounts for other research and development activities, working capital and 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


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