IPO Report: Xenon Pharmaceuticals (XENE)

Francis Gaskins |

xenon pharmaceuticals IPO, IPO report, IPOs this week, stocks to buy now, stock market today, small-cap stocks, biotech stocksXenon Pharmaceuticals ($XENE) is a clinical-stage biopharmaceutical company discovering and developing a pipeline of differentiated therapeutics for orphan indications. It is headquartered in Burnaby, British Columbia, Canada.

Six other companies are scheduled for the week of Oct. 13, 2014. The full IPO calendar is available at IPOpremium.

The manager and co-managers are: Jefferies & Co. and Wells Fargo Securities.

XENE nonescheduled a $44 million IPO with a market capitalization of $149 million at a price range midpoint of $12 for Friday, Oct. 17, 2014 on the Nasdaq. SEC filings

Xenon Pharmaceuticals IPO Report

Overview

XENE is a clinical-stage biopharmaceutical company discovering and developing a pipeline of differentiated therapeutics for orphan indications.

XENE has built a core enabling discovery platform for the discovery of validated drug targets by studying rare human diseases with extreme traits, including diseases caused by mutations in ion channels, known as channelopathies.

Genentech affiliate to purchase $5mm in concurrent private placement.

Teva to purchase $10mm on the IPO, 23%

Valuation

Glossary

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

annualizing June 6 mos

         

Xenon Pharmaceuticals (XENE)

$149

7.4

28.6

2.2

2.2

30%

Conclusion

Neutral

2.2 times book

Profitable based on collaboration rev

Collaboration partners include Teva (TEVA), a Genetech affiliate and Merck (MRK).

Business

XENE is a clinical-stage biopharmaceutical company discovering and developing a pipeline of differentiated therapeutics for orphan indications that XENE intends to commercialize on its own, and for larger market indications that XENE intends to partner with global pharmaceutical companies.

Collaboration partners

XENE’s pharmaceutical partners include Teva Pharmaceutical Industries, Ltd., or Teva (through its subsidiary, Ivax International GmbH), Genentech, Inc., or Genentech, and Merck & Co., Inc., or Merck (through its affiliate, Essex Chemie AG).

XENE’s pharmaceutical collaborations have generated in aggregate over $140.0 million in non-equity funding to date with the potential to provide XENE with over $1.0 billion in future milestone payments, as well as royalties and co-promotion income on product sales.

Discovery platform

XENE has built a core enabling discovery platform for the discovery of validated drug targets by studying rare human diseases with extreme traits, including diseases caused by mutations in ion channels, known as channelopathies. XENE has an integrated platform that includes in-house capabilities for human genetics, small molecule drug discovery, and preclinical and clinical development.

XENE’s business was founded on its proprietary discovery platform, which XENE refers to as Extreme Genetics.

Extreme Genetics involves the study of families where individuals exhibit inherited severe traits, or phenotypes.

By identifying and characterizing single-gene defects responsible for these phenotypes, XENE gains insights into human disease biology to better select targets for therapeutic intervention.

XENE’s Extreme Genetics discovery platform has yielded the first approved gene therapy product in the European Union, or the EU, a broad development pipeline and multiple pharmaceutical partnerships.

Platform discoveries

To date, XENE’s Extreme Genetics discovery platform has yielded:

Glybera, developed by XENE’s licensee uniQure Biopharma B.V., or uniQure, the first, and currently the only, gene therapy approved in the EU for the treatment of the orphan disorder lipoprotein lipase deficiency, or LPLD;

TV-45070 (formerly XEN402), a product candidate with four Phase 2 proof-of-concept clinical trials completed. XENE’s partner Teva is conducting a 300-patient, randomized Phase 2b clinical trial in osteoarthritis, or OA, of the knee and is planning clinical development in neuropathic pain indications, including postherpetic neuralgia, or PHN;

GDC-0276, a product candidate being developed in collaboration with Genentech for the treatment of pain. In September 2014, Genentech initiated a Phase 1 clinical trial for GDC-0276; and

preclinical programs including a sodium channel inhibitor for the orphan disorder Dravet Syndrome, or DS, and XEN801, a stearoyl Co-A desaturase, or SCD1, inhibitor for the treatment of acne. XENE anticipates filing an investigational new drug application, or IND, for XEN801 in the first half of 2015 and an IND for its DS program in 2016.

Dividend Policy

No dividends are planned.

Intellectual Property

As of September 30, 2014, XENE owned, co-owned or licensed 50 issued or allowed U.S. patents and approximately 20 pending U.S. patent applications, including provisional and non-provisional filings.

XENE also owned, co-owned or licensed an additional 525 pending and granted counterpart applications worldwide, including 129 country-specific validations of 11 European patents.

XENE has in-licensed from UBC patent applications and patents related to Glybera, and methods of making and using Glybera.

These include European Patent No. 1,200,117, Japanese Patent No. 5,095,894, Canadian Patent No. 2,370,081 and pending U.S. Patent Application No. 13/850,203. European Patent No. 1,200,117, Japanese Patent No. 5,095,894 and Canadian Patent No. 2,370,081, are expected to expire in June 2020 (absent any extensions of term); U.S. Patent Application No. 13/850,203, if issued, is expected to expire in 2020 (absent any extensions of term).

In addition, U.S. Patent No. 6,814,962, related European Patent No. 763,116, and pending counterpart U.S. Patent Application No. 13/584,203 have composition claims directed to various recombinant viruses containing LPL coding sequences and methods of using such viruses to treat various pathologies, and various other related patents and applications claiming priority to PCT/FR1995/00669 are directed to the preparation of recombinant viruses and uses in gene therapy, all of which are expected to expire between 2014 and 2015 (absent any extensions of term).

Competition

XENE faces potential competition in target discovery and product development from many different approaches and sources, including pharmaceutical and biotechnology companies, academic institutions and governmental agencies and public and private research institutions. Any product candidates or products that XENE or its collaborators successfully develop and commercialize will compete with existing products and new products that may become available in the future.

With respect to target discovery activities, competitors and other third parties, including academic and clinical researchers, may be able to access rare families and identify targets before XENE does.

5% stockholders

Entities affiliated with MX Associates, LLP         16.2%    

Entities affiliated with Lipoterx, Ltd.        11.4%                                                     

Entities affiliated with InterWest Partners            8.8%

FMR LLC          6.9%                                                    

Evan A. Stein    11.5%

Use of proceeds

XENE intends to use the $41 million in proceeds from its IPO as follows:

$17.0 million for preclinical and early clinical development of its Dravet Syndrome and XEN801 programs;

$11.0 million to fund genetic research and drug discovery activities using its Extreme Genetics discovery platform; and

the remainder for 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

Companies

Symbol Name Price Change % Volume
XENE Xenon Pharmaceuticals Inc. 8.00 0.20 2.56 19,821

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