IPO Report: ProNAi Therapeutics (DNAI)

Francis Gaskins |

ProNAi Therapeutics (DNAI) is a clinical-stage oncology company pioneering a novel class of therapeutics based on its proprietary DNA interference (DNAi) technology platform. The company is based in Vancouver, British Columbia, Canada,

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

SEC Documents

Manager, Joint-managers: Jefferies, BofA Merrill Lynch
Co-managers: Wedbush PacGrow, SunTrust Robinson Humphrey

End of lockup (180 days): Tuesday, January 12, 2016
End of 25-day quiet period: Monday, August 10, 2015

DNAI scheduled a $100 million IPO with a market capitalization of $410 million at a price range midpoint of $15 for Thursday, July 16, 2015 on Nasdaq.

ProNAi Therapeutics Summary

DNAI is a clinical-stage oncology company pioneering a novel class of therapeutics based on its proprietary DNA interference (DNAi) technology platform.

DNAI’s vision is to be the leader in developing and commercializing a portfolio of DNAi-based therapies to deliver extraordinary therapeutic outcomes that dramatically change patients’ lives.

The core of DNAI’s scientific expertise is its understanding of DNAi oligonucleotides, which are rationally designed DNA sequences that modulate the transcription of oncogenes known to be involved in cancer cell survival and proliferation.

ProNAi Therapeutics Valuation

Glossary

Accumulated deficit (mm)

.

.

-$127

     

Per share dilution

.

.

-$10.74

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

ProNAi Therapeutics (DNAI)

$410

no rev

-12.8

3.6

3.5

25%

             

ProNAi Therapeutics Conclusion

Neutral plus

Targeting hematological malignancies, including lymphoma

Achieved clinical responses

Plans large number of trials

Shareholders may purchase $15mm, 15%, of the IPO

Price to book 3.6

P/E -13, indicated moderate cash burn relative to market cap

ProNAi Therapeutics Business

DNAI is a clinical-stage oncology company pioneering a novel class of therapeutics based on its proprietary DNA interference (DNAi) technology platform.

DNAI’s vision is to be the leader in developing and commercializing a portfolio of DNAi-based therapies to deliver extraordinary therapeutic outcomes that dramatically change patients’ lives.

The core of DNAI’s scientific expertise is its understanding of DNAi oligonucleotides, which are rationally designed DNA sequences that modulate the transcription of oncogenes known to be involved in cancer cell survival and proliferation.

ProNAi Therapeutics Lead Product

DNAI’s lead DNAi product candidate, PNT2258, targets BCL2, a widely overexpressed oncogene that is an important gatekeeper of the programmed cell death process known as apoptosis and has been linked to many forms of cancer.

In a recent single-agent Phase 2 trial of 13 patients with relapsed or refractory non-Hodgkin’s lymphoma (NHL), PNT2258 demonstrated evidence of anti-tumor activity, with 11 patients achieving a complete response (CR), partial response (PR) or stable disease (SD).

Furthermore, all four of the diffuse large B-cell lymphoma (DLBCL) patients treated in this trial experienced a clinical response, including three CRs and one PR, with reported durations on study in the range of nine to more than 20 months.

Although not statistically powered for a formal efficacy analysis, DNAI believes the preliminary evidence of efficacy observed in this trial, coupled with safety and tolerability data collected to date, suggest that PNT2258 has the potential to change treatment paradigms across a wide range of oncology indications.

Accordingly, DNAI plans to pursue a broad registration-oriented clinical development program, initially in hematologic malignancies, that DNAI anticipates will provide the foundation of a global registration strategy for PNT2258.

ProNAi Therapeutics Trials

In December 2014, DNAI initiated “Wolverine,” an open-label 60 patient Phase 2 trial evaluating PNT2258 for the treatment of third-line relapsed or refractory diffuse large B-cell lymphoma (DLBCL).

By mid-2015, DNAI plans to initiate “Brighton,” an open-label 50 patient Phase 2 trial evaluating PNT2258 for the treatment of Richter’s transformed chronic lymphocytic leukemia (Richter’s CLL).

Richter’s CLL is a rare and aggressive form of NHL with no currently approved therapies.

DNAI plans to initiate three additional trials in 2016: in the first quarter, a Phase 2 trial of PNT2258 in combination with a therapeutic agent or treatment regimen; in the second quarter, a single-agent Phase 2 trial evaluating PNT2258’s potential in other hematological malignancies, such as acute myeloid leukemia, acute lymphoblastic leukemia and multiple myeloma; and in the third quarter, a second Phase 2 combination trial.

If the efficacy data obtained in some or all of these trials are highly compelling, DNAI plan to discuss accelerated registration paths and other regulatory designations with regulatory agencies.

DNAi Technology Platform

DNAi technology platform is based on its scientific expertise in DNA, the basic genetic building block for human life.

DNA is a double strand of nucleic acids that encodes the genetic instructions used in the development and function of all living organisms.

The information stored in DNA encodes genes that are transcribed into messenger RNA (mRNA), which are then translated to produce specific proteins that regulate cell generation, proliferation, survival and death, and also play a critical role in many diseases, including cancer.

Cancer is the leading cause of death in the developed world and the second leading cause of death in the United States, and is characterized by the uncontrolled growth and survival of abnormal cells.

Cancer cells may overexpress particular genes called oncogenes, which encode the proteins that promote growth and survival.

While cancer research has made demonstrable progress in recent decades, significant unmet medical needs remain, reinforcing the necessity for continued innovation.

DNAI believes that there is substantial opportunity for the next generation of cancer treatments to target DNA itself by directly interfering with the expression of the oncogenes responsible for cancer.

The vast majority of cancer therapy today is targeted downstream at the protein level and, in some cases, at RNA.

ProNAi Therapeutics Targets DNA

DNAI’s proprietary DNAi technology platform targets DNA, the upstream genetic material underlying the expression of proteins, and is therefore distinct from therapeutic approaches that target proteins or RNA.

This difference may allow DNAI’s DNAi technology to more profoundly impact oncogenic targets that may be difficult to effectively drug with these other approaches, and potentially result in enhanced efficacy, durability and safety outcomes.

In addition, DNAI believes that its unique mechanism for impacting downstream oncogenic proteins could also potentially amplify and be complementary to other therapeutic modalities.

ProNAi Therapeutics Intellectual Property

DNAI has filed and will continue to file patent applications directed to the compositions of matter and methods of use related to various aspects of PNT2258 and its DNAi technology.

As of March 31, 2015, DNAI was the owner of seven U.S. patents, expiring between 2017 and 2028, absent any adjustments or extensions, comprising claims directed to the compositions of PNT2258, PNT100, oligonucleotides directed against the oncogenes CMYC and RAS, and methods of use of pharmaceutical compositions comprising PNT2258 and rituximab.

As of March 31, 2015, DNAI also owned two pending U.S. patent applications, one of which related to PNT2258 for the treatment of cancer indications and the other of which related to DNA oligonucleotides directed against various oncogenes, including RAS.

Any patents issuing from these U.S. applications are expected to expire between 2024 and 2026, absent any adjustments or extensions. As of March 31, 2015, DNAI also owned 31 issued foreign patents and five pending foreign patent applications (including one allowed application) in 17 foreign jurisdictions, including Australia, Canada, China, Europe and Japan.

These foreign patents, and any patents issuing from these pending foreign patent applications, are expected to expire between 2024 and 2026, absent any adjustments or extensions.

These foreign patents and patent applications comprise claims that relate to the compositions of PNT2258, PNT100, oligonucleotides directed against the oncogenes CMYC, CHARAS, CKIRAS, HER2 and TGFa and methods of use of PNT2258 for cancer and in combination with rituximab.

As of March 31, 2015, DNAI also owned three pending international applications filed under the Patent Cooperation Treaty (PCT), with claims directed to oligonucleotide design, use of biomarkers to determine BCL2 modulation for cancer treatment and treatment methods using PNT2258.

The PCT is an international patent law treaty that provides a unified procedure for filing a single initial patent application and it allows the applicant to seek protection in any of the member states through national-phase applications. Any patents issuing from these PCT applications are expected to expire between 2033 and 2034, absent any adjustments or extensions.

ProNAi Therapeutics Competition

If PNT2258 is approved for DLBCL or Richter’s CLL, as the case may be, it will compete with existing therapies and currently marketed drugs, including the following:

DLBCL. The initial therapy for DLBCL typically consists of multi-agent cytotoxic drugs in combination with the monoclonal antibody rituximab.

In patients with DLBCL who are not elderly and who have good organ function, high dose chemotherapy with stem cell transplantation is often used.

Newer targeted agents such as the BTK inhibitor ibrutinib and the immunomodulatory drug lenalidomide have shown activity in the ABC subtype of DLBCL.

There are also a number of other widely used anti-cancer agents that have broad labels that include NHL, and some of these are being evaluated alone or in combination for the treatment of patients with DLBCL that have relapsed after several different types of chemotherapy.

Certain monoclonal antibodies similar to rituximab are also being evaluated in relapsed DLBCL.

Other oncology companies that have developed or are currently developing treatment for patients with DLBCL include Abbvie Inc., Bellicum Pharmaceuticals, Inc., Celgene Corporation, Epizyme, Inc., Juno Therapeutics, Inc., Karyopharm Therapeutics Inc., Kite Pharma, Inc., Novartis AG and Pharmacyclics, Inc.

Richter’s CLL. Although there are no specific therapies approved to treat Richter’s CLL, multi-agent cytotoxic drugs in combination with rituximab is typically used as a first-line treatment.

To DNAI’s knowledge, Karyopharm Therapeutics Inc. is the only other company with an active trial focused specifically on Richter’s CLL.

ProNAi Therapeutics 5% Shareholders Pre-IPO

Affiliates of Vivo Ventures         11.0%

Frazier Healthcare VI, L.P.          9.8%

OrbiMed Private Investments V, LP        9.0%

Affiliates of Adams Street Partners        5.8%

William D. Johnston Trust UA 6/3/88 FBO W. Johnston   5.0%

Nick Glover       5.4%      

Mina Sooch      8.8%

Donald Parfet   8.5%      

Albert Cha         11.0%                                                              

James Topper   9.8%    

ProNAi Therapeutics Dividends


No dividends are planned.

ProNAi Therapeutics Use of Proceeds

DNAI expects to receive $90 million from its IPO and use it for the following:

$33.0 million to fund its ongoing Wolverine Phase 2 trial, its planned Brighton Phase 2 trial that DNAI expects to initiate in mid-2015 and manufacturing activities related to these trials;

$22.0 million to fund other planned future Phase 2 trials related to PNT2258 and manufacturing activities related to these trials;

$4.0 million to support non-clinical activities and preclinical activities related to PNT2258, including activities related to its mechanism of action; and

$4.0 million to further develop its DNAi technology platform and broaden its pipeline of DNAi-based product candidates.

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
DNAI ProNAi Therapeutics Inc. 1.48 0.11 8.03 1,130,031

Comments

Private Markets

GoCoin

Blockchain currencies (e.g. Bitcoin) provide a new disruptive way to transfer value between parties over the internet as opposed to going through banks. GoCoin provides online merchants with a suite…

Ozobot by Evollve Inc

Ozobot is a world leader in compact super intelligent robots that entertain and educate through fun interactive gaming.