IPO activity has waned in the dog days of summer, but two more biotechs have now joined the growing list of companies with Wall Street ambitions. Entasis Therapeutics and Principia Biopharma have filed to go public, hoping to raise the cash needed to finance more clinical tests of their experimental drugs.
Entasis and Principia each set preliminary $86.2 million targets for their IPOs. The figure, used to calculate the registration fee, will likely change as the companies determine how many shares to sell and at what price. Waltham, MA-based Entasis, an antibiotics developer, has applied for a listing on the Nasdaq under the stock symbol “ETTX.” Principia, a South San Francisco, CA, company developing immunology and cancer drugs, has applied for a Nasdaq listing under the symbol “PRNB.”
This year has been a strong one for IPOs. According to IPO research firm Renaissance Capital, 151 companies have filed to go public so far this year, a 43.8 percent increase compared to the same period a year ago. A total of 133 IPOs have priced this year, a 44.6 percent increase from last year. Of those, 49 have been in healthcare, the most of any sector.
Entasis spun out of AstraZeneca (NYSE: [[ticker:AZN]]) in 2015. The company’s lead drug, ETX2514, was developed to block enzymes that help bacteria become resistant to antibiotics. The Entasis IPO filing comes days after it reported encouraging preliminary data from a Phase 2 study testing ETX2514 in combination with another antibiotic, sulbactam, as a treatment for complicated urinary tract infections. The company says a Phase 3 study testing the drug combination on Acinetobacter baumannii infections that have become resistant to the broad-spectrum antibiotic carbapenem is expected to start in the first quarter of next year. A. baumannii has emerged as a threat in hospitals, where it can cause infections in patients with compromised immune systems.
In its filing, Entasis says it will use the IPO proceeds to finance the Phase 3 tests of its lead drug, and also advance another experimental antibiotic, ETX0282CPDP, into early-stage clinical studies. The company adds that it expects some of that early-stage work will be funded by awards from the antibiotics public-private partnership CARB-X. Entasis spent $25.7 million on research and development last year, a 63 percent increase compared to 2016.
Entasis was initially backed by $40 million in a Series A round of financing from AstraZeneca. In 2016, Clarus Ventures led a $50 million Series B round joined by Frazier Healthcare Partners, Novo A/S, and Eventide Funds.
Principia, founded in 2008, has developed a broad drug pipeline based on research from the labs at the University of California San Francisco. The company is developing drugs that can either have a long or a short binding time with their targets, which could help patients avoid side effects. As pills, the Principia small molecule drugs are also meant to offer patients a more convenient form compared to injectable biologic drugs. Principia’s drug pipeline has produced four clinical-stage drugs, including one for multiple sclerosis that is being developed in partnership with Sanofi (NYSE: [[ticker:SNY]]). That drug, PRN2246, was developed to penetrate the blood-brain barrier and block B cells and other immune cells that play a role in the disease. Under the agreement, Principia is responsible for completing Phase 1 tests of the drug, and Sanofi will finance further clinical development.
The IPO cash will also help Principia continue clinical development of a treatment for pemphigus, a disease that causes sores and blisters on the skin or mucous membranes. Principia says in its IPO filing that it plans to start a Phase 3 study testing the drug (PRN1008) by the end of the year. The company is currently enrolling patients in a Phase 2 study testing the drug in immune thrombocytopenic purpura, a disease that leads to patients bruising and bleeding easily.
Principia has raised $177.3 million from investors, including New Leaf Venture Partners, OrbiMed, Morgenthaler Venture Partners, SR One Limited, Sofinova Ventures, and Mission Bay Capital. The IPO filing shows that the funding total includes a $50 million Series C round this month led by Cormorant Asset Management, HBM Healthcare Investments, RTW Investments, and Samsara BioCapital, which were joined by earlier investors. Principia spent $25.3 million on research and development in 2017, up 10.8 percent compared to 2016.
