IPO Report: Vital Therapies (VTL)

Francis Gaskins |

Vital Therapies ($VTL) is a biotherapeutic company focused on developing a cell-based therapy targeting the treatment of all forms of acute liver failure.

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

Manager, Joint managers: Credit Suisse, William Blair.  Co-Managers: Cowen and Company, Canaccord Genuity, BTIG.  S-1 filed November 6, 2013.

VTL scheduled a $75 million IPO with a market capitalization of $277 million at a price range midpoint of $17, on Nasdaq for Thursday, November 21, 2013.

Overiew

VTL is currently conducting three phase three clinical trials.

Valuation

Valuation Ratios

Mrkt

Price /

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% offered

annualizing Sept 9 mos

Cap (mm)

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TanBV

in IPO

Vital Therapies (VTL)

$277

n/a

-9.4

2.8

2.8

27%

Accumulated deficit of ($93) million.

Glossary

Conclusion

The rating on VTL is neutral.

Business

VTL is a biotherapeutic company focused on developing a cell-based therapy targeting the treatment of all forms of acute liver failure.

VTL’s product candidate, the ELAD System, or ELAD, is a bio-artificial liver therapy that operates outside the body, or extracorporeal, and is designed to allow the patient’s own liver to regenerate to a healthy state, or to stabilize the patient until transplant.

VTL believes that ELAD has the potential to be a life-saving therapy in patients suffering from acute liver failure. ELAD has received orphan designation in the United States and Europe for the treatment of acute liver failure.

Market
Acute liver failure, including acute-on-chronic, surgically-induced and fulminant liver failures, represents a serious unmet medical need affecting at least 30,000 patients annually in the United States with similar incidence rates in Europe.

Except for liver transplant, which is limited by a shortage of donor organs, standard-of-care treatment focuses on the management of disease complications, does not restore lost liver function, and is associated with high mortality.

VTL believes that ELAD holds considerable therapeutic promise because it has shown trends indicating the potential to increase survival rates in patients with acute liver failure.

ELAD Therapy
Prior to the initiation of VTL’s ongoing Phase 3 clinical trial program, more than 150 subjects have received ELAD therapy in seven clinical trials and through a compassionate use program, which VTL believes collectively show a promising therapeutic profile.

ELAD is an allogeneic cellular therapy system incorporating VTL’s human liver-derived C3A cells contained in four hollow fiber cartridges that are combined with single use customized disposable sets and a reuseable bedside unit to provide extracorporeal circulation of blood plasma to the C3A cells and return of treated plasma back to the patient. The C3A cells remain within these four ELAD cartridges during the treatment session and only the treated plasma, which is later reconstituted with the patient’s blood cells, is returned to the patient.

VTL has customized the liver-derived C3A cell line to create an optimized bank of cells for use in the ELAD system that VTL cultures and expands using proprietary techniques.

These cells have been shown to retain many key synthetic and metabolic processes of normal human hepatocytes, the primary functional cell of the liver. The four ELAD cartridges collectively contain 440 grams, or one pound, of C3A cells.

The patient’s blood plasma is treated by VTL’s C3A cells in a single session of continuous therapy lasting between three and ten days. VTL believes that ELAD therapy facilitates the recovery of liver function and has the potential to improve clinical outcomes and increase the likelihood of survival in patients with acute liver failure.

Clinical trials
VTL is currently conducting three Phase 3 clinical trials in various forms of acute liver failure.

In March 2013, VTL initiated VTI-208, a Phase 3 randomized, controlled clinical trial in 200 subjects with alcohol-induced liver decompensation, or AILD.

As of October 29, 2013, 34 subjects had been enrolled in this trial and 27 clinical sites were actively enrolling subjects.

In the fourth quarter of 2013, VTL intends to initiate enrollment in a second Phase 3 randomized, controlled clinical trial, VTI-210, in 120 subjects with acute alcoholic hepatitis, or AAH, which is a subset of AILD. Also in the fourth quarter of 2013, VTL intends to initiate enrollment in VTI-212, a Phase 3 randomized, controlled clinical trial in 126 subjects with fulminant hepatic failure, or FHF.

Intellectual property

As of September 30, 2013, VTL is the owner of record of three issued U.S. patents and over a dozen issued or allowed foreign patents. VTL’s key U.S. patent, which it believes covers its ELAD system, claims a method of using C3A cells to treat a patient’s blood and is currently set to expire in April 2027, unless extended further.

In addition, in September 2013, VTL received notice of allowance from the United States Patent & Trademark Office for a patent application with claims covering an extracorporeal device configuration, which VTL believes to include its ELAD system, independent of cell-type used.

Foreign counterparts of this patent and allowed application have been issued in Australia, Canada, Indonesia, Israel, Japan, Mexico, New Zealand, Singapore, South Africa, South Korea and Taiwan and remain under review in certain other jurisdictions including Europe, Brazil, China, India and the Philippines.

Competition

At least four companies have prior research work on various human hepatocyte cell lines including Exten Industries, Hepalife Technologies, Fresenius, and Hybrid Organ GmbH.

In addition, the University College London, and the University of Amsterdam and its spinout Hep-Art Medical Devices are actively pursuing animal research in this area.

Several companies have also attempted to develop extracorporeal therapy based upon primary porcine hepatocytes, although ongoing research in this area is difficult to ascertain.

Two commercially available liver dialysis systems, from Gambro and Fresenius, have undergone extensive clinical development, although both have failed toshow an improvement in long-term survival among patients with acute liver failure.

5% stockholders

Trusts and Other Entities Affiliated with Muneer A. Satter 48.6%

Terence E. Winters, Ph.D. 5.57%

Entities Affiliated with BSL Entities 5.24%

Use of proceeds

VTL expects to net $66 million from its IPO. Proceeds are allocated as follows:

$45 million to fund the Phase 3 clinical development of ELAD and the remainder for working capital and other general corporate purposes.

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Companies

Symbol Name Price Change % Volume
VTL Vital Therapies Inc. 5.15 0.15 3.00 44,429
GPEDY Gruppo Editorl L\'E U/Adr n/a n/a n/a 0

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