The global economic crash means the window for initial public stock offerings is all but closed but that didn’t stop Zentalis Phamaceuticals from pushing through. The clinical-stage drug developer priced its IPO late Thursday, raising $165.2 million in its stock market debut.
Zentalis was able to sell more shares than it expected, and at a top price. The New York company offered 9.18 million shares for $18 apiece. When Zentalis set the terms for its IPO earlier this week, it planned to sell about 7.6 million shares in the range of $16 to $18 each. Those shares are expected to start trading on the Nasdaq Friday under the stock symbol “ZNTL.”
The Zentalis IPO comes after a first quarter that started with expectations that this year would continue the strong IPO activity of 2019. A total of 25 companies went public in the quarter raising $6.8 billion, according to IPO research firm Renaissance Capital. But the IPO wave crashed as the effects of the coronavirus pandemic spread to the financial markets. Renaissance counts as many as 20 companies that shelved their IPO plans as economic conditions deteriorated.
Zentalis revealed its IPO plans in early March, just prior to the start of the economic downturn. The company is developing small molecule drugs that address biological pathways of cancers. Zentalis’s lead drug candidate, ZN-c5, is a potential treatment for breast cancer. The drug is intended as a treatment for cancers that are estrogen receptor positive. The Zentalis pill is what’s called a selective estrogren receptor degrader (SERD).
AstraZeneca (NYSE: [[ticker:AZN]]) currently markets a SERD called fulvestrant (Faslodex), an injectable drug that is a blockbuster seller for the company. But Zentalis contends that its once-daily pill would be more patient friendly and potentially more effective than the AstraZeneca treatment. According to Zentalis’s prospectus, the company plans to use about $60 million of the IPO proceeds to complete Phase 1/2 testing of ZN-c5 by itself and in combination with Pfizer (NYSE: [[ticker:PFE]]) drug palbociclib (Ibrance). According to the IPO filing, preliminary results from the Phase 1 portion of the study are expected in the second half of this year.
The IPO cash will also support other drugs in the Zentalis pipeline. The company has earmarked $25 million for ZN-c3, a drug in a Phase 1/2 clinical trial in patients with solid tumors. Another $15 million is budgeted for ZN-d5, which is being prepared for Phase 1 tests in B-cell lymphoma. The company plans to spend about $5 million for ZN-e4, which is in Phase 1 testing in advanced non-small cell lung cancer.
Zentalis is mindful that the coronavirus pandemic may affect its plans. The company notes several times in its filing that the spread of COVID-19 infection could affect its preclinical and clinical research. A growing number of life science companies are either pausing clinical trials or postponing the start of new studies due to the impact of the pandemic on clinical trial sites. Zentalis estimates that the IPO proceeds combined with its cash holdings will be enough to fund the company into 2022.
Image: iStock/Mr_Twister
