Kodiak Sciences Files $100 Million IPO for Chronic Retinal Diseases

Equities Research  |

Macular degeneration is a leading cause of vision loss, affecting more than 10 million people in the US—more than cataracts and glaucoma combined—according to the American Macular Degeneration Foundation. The macula is the central portion of the retina. Those with macular degeneration gradually, inexorably, lose the ability to focus in the central part of their field of vision. 80% to 90% of people with macular degeneration are affected by the dry, or atrophic, type, according to the American Foundation for the Blind, and in 10% to 20% of people, the disease progresses to the wet, or neovascular, type.


Source: American Macular Degeneration Foundation

Wet macular degeneration accounts for approximately 90% of all cases of severe vision loss from the disease. Abnormal blood vessels beneath the retina begin to grow toward the macula, tending to break, bleed, and leak fluid. This further damages the macula, causing it to tear away from its base and leading to rapid, severe vision loss.

Diabetic retinopathy is the leading cause of vision loss globally, according to a 2015 study by Ryan Lee, Tien Wong and Charumathi Sabanayagam of the Singapore Eye Research Institute. About one-third of the 285 million people worldwide with diabetes have signs of diabetic retinopathy, and one-third of those with diabetic retinopathy have what is classified as "vision-threatening" severity, including those with diabetic macular edema. Diabetic retinopathy is caused by an excess of blood sugar that blocks blood vessels that nourish the retina. Though the body responds by attempting to grow new vessels, they don't develop properly and can leak easily, leading to structural and nerve damage.

Kodiak Sciences

Palo Alto based Kodiak Sciences (pending Nasdaq: KOD) is developing therapeutics to treat chronic, high-prevalence retinal diseases. The company's lead candidate, KSI-301, is built on its proprietary antibody biopolymer conjugate (ABC) platform, which is designed to maintain potent and effective drug levels in ocular tissues. Kodiak is pursuing wet age-related macular degeneration and diabetic retinopathy with KSI-301. The company initiated its first Phase 1 study in nine patients in July 2018 and achieved the primary safety and tolerability endpoint at the pre-planned dose levels.

Kodiak filed its Form S-1 for a $100 million initial public offering via Morgan Stanley and BofA Merrill Lynch on Friday. The company expects to start a 400-patient global Phase 2 study of KSI-301 in the US and China in early 2019 to evaluate the non-inferiority of KSI-301 administered as infrequently as every 16 weeks versus aflibercept [marketed as Eylea by Regeneron  (REGN)] administered on its every 8-week labeled regimen. The company states in its S-1 that the FDA has indicated that this Phase 2 study, if successful, can be supportive of a marketing application for KSI-301 as one of two pivotal studies required for approval. Kodiak also plans to initiate a Phase 2 trial of KSI-301 in diabetic retinopathy patients in the US and China next year.

The current standard of care for wet macular degeneration and diabetic retinopathy is anti-VEGF therapy. Overexpression of VEGF, vascular endothelial growth factor, causes swelling, or edema, of the retina and loss of vision. Anti-VEGF therapies such as Regeneron's aflibercept (Eylea) and Genentech's  (RHHBY) ranibizumab (Lucentis) for all indications totaled approximately $9.6 billion in 2017. according to Kodiak's S-1. The company says that its data suggests that KSI-301 stays in the eye four to five times longer than today’s approved therapies, which would mean more convenient treatment regimens with less frequent dosing.

The company, which was launched as Oligasis in 2009, has raised over $93 million in financing to date. The most recent disclosed transaction was in April 2018, when Kodiak completed a $33 million mezzanine private financing of convertible notes with existing investors Baker Bros. Advisors and The Dustin Moskovitz Trust, new investors Perceptive Advisors and ArrowMark Partners and existing investors.

Chairman and CEO Victor Perlroth, MD, has been with Kodiak since inception. Previously, Dr. Perlroth served as Venture Partner and then Entrepreneur in Residence at MPM Capitalment firm. In 2003, Dr. Perlroth co-founded Avidia, which he was instrumental in selling to Amgen  (AMGN) in 2006 for $450 million.


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Companies

Symbol Name Price Change % Volume
AMGN Amgen Inc. 203.20 0.86 0.43 2,204,609 Trade
REGN Regeneron Pharmaceuticals Inc. 383.70 -4.63 -1.19 610,455 Trade
RHHBY Roche Holding Ltd ADR (Sponsored) 30.55 -0.12 -0.39 1,605,780

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