IPO Report: Tracon Pharmaceuticals (TCON)

Francis Gaskins |

Tracon Pharmaceuticals IPO, Tracon Pharmaceuticals IPO price, Tracon Pharmaceuticals IPO date, IPOs this week, stocks to buy now, small-cap stocksTracon Pharmaceuticals (TCON) is a clinical stage biopharmaceutical company focused on the development and commercialization of novel targeted therapeutics for cancer, age-related macular degeneration, or AMD, and fibrotic diseases. It is based in San Diego, CA.

Eleven other companies are scheduled to IPO for the week of Jan. 26, 2015.  The full IPO calendar is available at IPOpremium.

Manager, Joint-managers: Wells Fargo Securities and Stifel.

Co-managers: Needham & Company and Oppenheimer.

TCON scheduled a $47 million IPO with a market capitalization of $156 million at a price range midpoint of $13 for Friday, Jan. 30, 2015 on Nasdaq.  SEC Documents

Tracon Pharmaceuticals IPO Overview

TCON is a clinical stage biopharmaceutical company focused on the development and commercialization of novel targeted therapeutics for cancer, age-related macular degeneration, or AMD, and fibrotic diseases.

TCON is a leader in the field of endoglin biology and are using its expertise to develop antibodies that bind to the endoglin receptor.

Tracon Pharmaceuticals IPO Valuation

Glossary

Accumulated deficit (mm)

.

.

-$32

     

Per share dilution

.

.

-$7.54

     

-----------------------------------------------------------------------

     

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

annualizing Sept 9 mos

         

Tracon Pharmaceuticals (TCON)

$156

45.0

-27.2

2.4

2.4

30%

             

Tracon Pharmaceuticals IPO Conclusion

Neutral

Therapeutics for cancer, age-related macular degeneration and fibrotic diseases.

Collaborators include National Cancer Institute

Top line data for Phase 2 trials expected last '15 mid '16

Relatively low price-to-book of 2.4

Relatively low cash burn rate:  P/E ratio of -27

Insiders may purchase $8.2mm, 17.4%

New Enterprise Associates may purchase $5mm in a current private placement

Tracon Pharmaceuticals Business

TCON is a clinical stage biopharmaceutical company focused on the development and commercialization of novel targeted therapeutics for cancer, age-related macular degeneration, or AMD, and fibrotic diseases.

TCON is a leader in the field of endoglin biology and are using its expertise to develop antibodies that bind to the endoglin receptor.

Endoglin is essential to angiogenesis, the process of new blood vessel formation, and a key contributor to the development of fibrosis, or tissue scarring.

Tracon Pharmaceuticals Collaborations

TCON has collaborated with the National Cancer Institute (NCI),, which has selected TRC105 and TRC102 for federal funding of clinical development, as well as Case Western.

Under these collaborations, NCI has sponsored or is sponsoring seven completed or ongoing clinical trials of TRC105 and TRC102, and Case Western is sponsoring two ongoing clinical trials of TRC102.

TCON anticipates that NCI will complete ongoing Phase 2 clinical trials of TRC105 and may initiate other Phase 2 clinical trials in addition to the Phase 2 clinical trials of TRC105 that TCON is sponsoring.

Based on correspondence with NCI in June 2014, TCON expects that Phase 2 clinical trials of TRC102 will be completed with NCI funding.

If merited by Phase 2 data, TCON expects to fund initial Phase 3 clinical trials of TRC105 and TRC102 and, based on NCI's past course of conduct with similarly situated pharmaceutical companies in which it has sponsored pivotal clinical trials following receipt of positive Phase 2 data, TCON anticipates that NCI will sponsor Phase 3 clinical trials in additional indications.

Tracon Pharmaceuticals Lead product

TCON’s lead product candidate, TRC105, is an anti-endoglin antibody that is being developed for the treatment of multiple solid tumor types in combination with inhibitors of the vascular endothelial growth factor, or VEGF, pathway.

The VEGF pathway regulates vascular development in the embryo, or vasculogenesis, and angiogenesis. TRC105 has been studied in six completed Phase 2 clinical trials and three completed Phase 1 clinical trials, and is currently being studied in four Phase 2 clinical trials.

TCON expects topline data in all of these ongoing clinical trials by late 2015 to mid 2016 and, if results are positive, TCON expects to initiate Phase 3 clinical trials for one or more initial indications of soft tissue sarcoma, renal cell carcinoma, glioblastoma, an aggressive form of brain cancer, and hepatocellular carcinoma by the end of 2016.

TCON believes treatment with TRC105 in combination with VEGF inhibitors may improve survival in cancer patients when compared to treatment with a VEGF inhibitor alone.

In initial clinical trials of more than 300 patients, TRC105 has shown good tolerability and promising anti-tumor activity, particularly in combination with VEGF inhibitors.

In a Phase 1/2 clinical trial of TRC105 with Avastin (bevacizumab), a large molecule VEGF inhibitor, that primarily enrolled patients with colorectal and ovarian cancer whose cancer had progressed on prior Avastin treatment the combination demonstrated anti-tumor activity.

Specifically, of 25 evaluable patients treated previously with VEGF inhibitors, 16 patients (64%) had stable disease, of whom 10 patients (40%) had partial responses.

Six responding patients treated with prior VEGF inhibitors (24%) remained without cancer progression longer than during their prior VEGF inhibitor therapy, and were therefore considered to have durable responses.

TRC105 has also been administered with the VEGF inhibitors Nexavar (sorafenib), Votrient (pazopanib) and Inlyta (axitinib) in three ongoing clinical trials.

In the ascending dose portion of a Phase 2 clinical trial of TRC105 with Inlyta in patients with renal cell carcinoma, 10 of 17 patients (59%) demonstrated partial responses.

In the ascending dose portion of a Phase 2 clinical trial of TRC105 with Nexavar in patients with hepatocellular carcinoma, three of the 13 patients (23%) treated at recommended Phase 2 doses of TRC105 (10 mg/kg or 15 mg/kg) demonstrated partial responses, in a setting where the expected partial response rate of Nexavar alone is 2%.

In the ascending dose portion of a Phase 2 clinical trial of TRC105 with Votrient, several patients have demonstrated tumor reductions, and a patient with angiosarcoma has an ongoing complete response to treatment.

Tracon Pharmaceuticals Intellectual property

TCON’s patent estate as of December 29, 2014, on a worldwide basis, includes 12 issued patents and four pending patent applications in the United States and 16 issued patents and 28 pending patent applications outside the United States, with pending and issued claims relating to TCON’s product candidates.

Thirteen of TCON’s issued patents cover antibodies to endoglin that TCON has selected as the core focus of its development approach.

These figures include in-licensed patents and patent applications to which TCON holds exclusive commercial rights in non-ophthalmologic fields of use.

Tracon Pharmaceuticals Competition

Oncology Therapies

TCON is developing TRC105 to be used in combination with VEGF inhibitors for the treatment of cancer. If TRC105 is approved, it could compete with other non-VEGF angiogenesis inhibitors in development, including some that also target the endoglin pathway and have the potential to be combined with VEGF inhibitors or used independently of VEGF inhibitors to inhibit angiogenesis.

Acceleron Pharma Inc., Amgen, Inc., MedImmune LLC, OncoMed Pharmaceuticals Inc., Pfizer Inc., Regeneron Pharmaceuticals, Inc. and Roche AG are each developing non-VEGF angiogenesis inhibitors, which are in various phases of clinical development.

Pfizer's product candidate targets the endoglin co-receptor ALK1 and is in a Phase 1b clinical trial in combination with Stivarga in patients with hepatocellular carcinoma.

Acceleron's product candidate targets the endoglin ligand BMP and is in a Phase 2b clinical trial in combination with Inlyta in patients with renal cell carcinoma and a Phase 1b clinical trial in combination with Nexavar in patients with hepatocellular carcinoma.

TCON is developing TRC102 to be used in combination with alkylating chemotherapeutics (including Temodar) and antimetabolite chemotherapeutics (including Alimta and Fludara) for the treatment of cancer.

If TRC102 is approved, it could compete with other inhibitors of DNA repair. Tesaro, Inc. and AbbVie Inc. are each developing inhibitors of DNA repair that work by a mechanism of action that is distinct from that of TRC102.

In addition to the therapies mentioned above, there are many generic chemotherapeutics and other regimens commonly used to treat various types of cancer, including soft tissue sarcoma and glioblastoma.

AMD Therapies

TCON’s partner Santen is developing DE-122 for the treatment of AMD and other eye diseases.

If DE-122 is approved in combination with a VEGF inhibitor it could compete with product candidates currently in clinical development that inhibit the function of PDGF or inhibit the function of both VEGF and PDGF, of which Ophthotech Corporation's anti-PDGF agent, Fovista, currently in Phase 3 clinical development in combination with Lucentis, is the most advanced.

If DE-122 is approved as a single agent, it would compete with currently marketed VEGF inhibitors, including Avastin and Lucentis (marketed by Genentech in the United States), and Eylea (marketed by Regeneron in the United States), which are well established therapies and are widely accepted by physicians, patients and third-party payors as the standard of care for the treatment of AMD.

In addition, DE-122 could face competition from other VEGF inhibitors in development, such as Allergan's VEGF inhibitor, DARPin, which is in Phase 2 clinical development for administration in a single intraocular injection.

Fibrotic Disease Therapies

If TRC205 is approved for the treatment of diseases characterized by fibrosis, including NASH and IPF, TCON anticipates that TRC205 could compete with other therapies being developed for the same or similar indications.

In addition, TRC205 would compete with therapies currently used off-label to treat fibrotic diseases.

Tracon Pharmaceuticals 5% shareholders pre-IPO

JAFCO Super V3 Investment Limited Partnership            19.5%

New Enterprise Associates 14, L.P.        17.4%

Brookline Tracon Investment Fund LLC   15.5%

Nextech III Oncology, LPCI        8.8%

BMV Direct II LP            6.0%

Alfred Scheidegger, Ph.D.         8.8%

J. Rainer Twiford, J.D., Ph.D.   15.6%              

Tracon Pharmaceuticals Dividends

No dividends are planned.

Tracon Pharmaceuticals IPO Use of proceeds

TCON expects to receive $40 million from its IPO and use it for the following:

$15.0 million to initiate manufacturing activities required for regulatory approval;

$9.0 million to initiate clinical activities for its anticipated initial Phase 3 clinical trial of TRC105;

$3.0 million to fund additional Phase 1 and Phase 2 clinical trials of TRC105 in large market oncology indications such as colorectal cancer, lung cancer, breast cancer and hepatocellular carcinoma;

$0.5 million to provide clinical supply of TRC102 for and to provide support for NCI's conduct of its four anticipated Phase 1 or Phase 2 clinical trials of TRC102 in combination with chemotherapeutics;

$6.0 million to fund its preclinical studies of TRC205 in non-cardiac and cardiac models of fibrosis and obtain the supply of TRC205 for its anticipated Phase 1 clinical trials; and

the remainder for working capital and other general corporate purposes, including funding the costs of operating as a public company.

 

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
TCON TRACON Pharmaceuticals Inc. 5.65 0.05 0.89 71,935

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