Akcea Therapeutics is joining the parade of biotechs going public, but the company had to cut its stock price and sell more shares in order to pull it off.
Cambridge, MA-based Akcea had planned on raising $125 million from the initial public offering, and it hit that target. But the biotech priced its offering of 15.6 million shares at $8 apiece, well below the $12 to $14 per share range that the company had initially set for an offering of 9.6 million shares. The company’s stock is expected to begin trading on the Nasdaq exchange Friday under the symbol “AKCA.”
Akcea formed in 2014 as a subsidiary of Carlsbad, CA-based Ionis Pharmaceuticals (NASDAQ: [[ticker:IONS]]). This lipid drug-focused unit used Ionis’ technology to develop four compounds. In March, Akcea announced plans to spin out of Ionis supported by an IPO. Akcea also disclosed a partnership with Novartis (NYSE: [[ticker:NVS]]), which has the option to license two of the biotech’s compounds.
Akcea’s lead compound is called volanesorsen. The injectable drug was developed to treat rare lipid disorders characterized by high levels of triglycerides, a chemical compound that stores fat, as well as inflammation of the pancreas called pancreatitis. Akcea has finished two Phase 3 clinical tests of its drug as a treatment for a lipid disorder called familial chylomicronemia syndrome (FCS). A separate Phase 3 trial treating patients who have familial partial lypodystrophy (FPL) is ongoing.
While FCS and FPL share some similarities, such as high triglyceride levels and the risk of pancreatitis, these diseases show themselves in patients in different ways. In FPL, patients cannot properly store and distribute fat, which can lead to the absence of fat in the buttocks and the arms and legs, and the buildup of fat in other places, such as the head and the neck. In FCS, patients can’t properly clear fat. Akcea estimates that between 3,000 and 5,000 people have FCS; estimates for FPL fall in the same range.
Volanesorsen blocks the production of apolipoprotein C-III, a protein key to regulating the body’s process of clearing triglycerides, the company says in its filing. Akcea has completed two randomized, placebo-controlled Phase 3 trials enrolling FCS patients. In one of them, a one-year study enrolling 66 patients, Akcea reported that patients treated with its drug saw triglyceride levels reduced by 77 percent. In the other Phase 3 trial, a six-month study enrolling 113 patients, Akcea says its drug met the main goal of reducing triglycerides at three months. The company also reported a statistically significant reduction in pancreatitis attacks. Based on those results, Akcea expects to file for FDA approval of its drug to treat FCS in the third quarter.
Serious side effects were observed in five patients participating in the FCS clinical trials. Two who experienced an allergic reaction to the injection recovered, Akcea says. Three others experienced low platelet levels in their blood. The company says that side effect resolved after patients stopped taking the drug. No deaths or heart problems were reported in the trials. Though declines in platelet counts were observed in “many patients,” Akcea says in the IPO prospectus that those declines did not have a noticeable effect for most participants and were managed by adjusting the dosage. The most common side effects were mild reactions at the site of injection.
According to Ackcea’s filing, IPO proceeds will support the launch and commercialization of volanesorsen. The company will also apply the cash toward more clinical trials. Akcea is currently enrolling patients in a Phase 3 clinical trial testing the drug as a treatment for FPL. Data from that study are expected in 2019.
If the FDA approves volanesorsen, Akcea says that it will commercialize the drug for FCS and FPL on its own. But two other Akcea drugs could advance with the help of a partner. Novartis began collaborating with Akcea in January, when it paid the biotech $75 million up front for the right to license and develop two compounds as potential treatments for cardiovascular disease. Those two compounds are currently in early stage clinical trials Akcea must bring those drugs through Phase 2 studies before Novartis could exercise its option to pay an additional $150 million to license each one.
If Novartis successfully brings those drugs to the market, Akcea could earn as much as $600 million in additional milestone payments. But Akcea stands to gain cash from Novartis in the near term. Novartis agreed to purchase $50 million in Akcea stock at the IPO price, according to the prospectus.
In 2016, Akcea reported $68.5 million in research and development expenses, a 34 percent increase compared to 2015. The company says it has financed its operations with a $100 million cash infusion from Ionis two years ago, along with the $75 million up front payment from Novartis earlier this year. At the end of the first quarter, Akcea had $124.5 million in cash, according to company filings.
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