Based in South San Francisco,Calithera Biosciences (CALA) scheduled an $84 million IPO on the NASDAQ with a market capitalization of $223 million at a price range midpoint of $14 for Thursday, Oct. 2, 2014.
Summary
CALA is a clinical-stage pharmaceutical company focused on discovering and developing novel small molecule drugs directed against tumor metabolism and tumor immunology targets for the treatment of cancer. CALA's focus in on solid tumors, leukemias, lymphomas and multiple myeloma
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Management
Manager: Leerink Partners
Joint-managers: Wells Fargo Securities, JMP Securities
End of lockup (180 days): Tuesday, March 31, 2015
End of 25-day quiet period: Monday, Oct. 27, 2014
Valuation
Glossary
Conclusion
Neutral
Price-to-book of 1.9
In three Phase 1 clinical trials
Shareholders may buy $15mm
CALA is currently conducting three Phase 1 clinical trials of CB-839 in the United States in patients with solid tumors, leukemias, lymphomas and multiple myeloma. To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.
Business
CALA is a clinical-stage pharmaceutical company focused on discovering and developing novel small molecule drugs directed against tumor metabolism and tumor immunology targets for the treatment of cancer.
Tumor metabolism and tumor immunology have emerged as promising new fields for cancer drug discovery, and recent clinical successes with therapeutic agents in each field have demonstrated the potential to create fundamentally new therapies for cancer patients.
CALA’s lead product candidate, CB-839, is an internally discovered, first-in-class inhibitor of glutaminase, a critical enzyme in tumor metabolism.
CALA is currently evaluating CB-839 in three Phase 1 clinical trials in solid and hematological tumors. CALA’s lead preclinical program in tumor immunology is directed at developing inhibitors of the enzyme arginase and may provide a first-in-class therapeutic agent for this novel target.
CALA’s ongoing research efforts are focused on discovering additional product candidates against novel tumor metabolism and immunology targets.
The field of tumor metabolism seeks to exploit the unique ways in which cancer cells take up and utilize nutrients in order to grow and survive. It is now recognized that cancer cells rely on certain metabolic processes, or pathways, to a much greater extent than normal cells.
The enhanced use of these pathways by cancer cells often results in a dependence on, or “addiction” to, these pathways that is not observed in normal cells. This creates an opportunity to selectively suppress the growth of cancer cells with therapeutic agents that specifically target these metabolic pathways.
CALA’s lead product candidate in tumor metabolism, CB-839, takes advantage of the pronounced dependency many cancers have on the nutrient glutamine for growth and survival. CB-839 inhibits glutaminase, an enzyme required by cancer cells to utilize glutamine effectively. In preclinical studies, CB-839 demonstrated broad antitumor activity in tumor cell lines, inhibited the growth of human tumors in animal models and was well tolerated in toxicity studies.
CB-839 was also synergistic with several approved cancer therapeutics that are part of the current standard of care.
CALA is currently conducting three Phase 1 clinical trials of CB-839 in the United States in patients with solid tumors, leukemias, lymphomas and multiple myeloma.
The purpose of these trials is to evaluate the safety of CB-839 both as a single agent and in combination with approved therapies and to seek preliminary evidence of efficacy.
CALA anticipates completing the ongoing single agent dose escalation stage of these trials by the end of 2014.
CALA then plans to enroll patient cohorts in select tumor types predicted to be sensitive to CB-839 based on results from its preclinical studies.
CB-839 will be tested in these tumor types either as a single agent or in combination with approved therapies.
CALA expects data to be available from its single agent trials in mid-2015 and from its combination trials in late 2015.
Pending input from the U.S. Food and Drug Administration, or the FDA, on the results of CALA’s Phase 1 trials and its Phase 2 trial protocols, CALA plans to initiate in late 2015 or early 2016 one or more Phase 2 clinical trials to study CB-839 as a single agent or in combination with approved therapies.
CALA believes CB-839 has the potential to be an important new therapeutic agent with a novel mechanism of action for the treatment of a broad range of cancers and is the only selective glutaminase inhibitor currently in clinical trials.
CALA’s clinical program seeks to identify cancers that will be most sensitive to CB-839 to allow the greatest benefit for patients and to pursue the most efficient path to regulatory approval.
CALA currently retains all commercial rights to CB-839 and have been granted a U.S. patent which includes composition of matter coverage for CB-839 through 2032.
Intellectual property
As of June 30, 2014, the intellectual property portfolio for CALA’s tumor metabolism program, which includes CB-839, consists of one issued U.S. patent directed to composition of matter for CB-839, which expires in 2032.
CALA also has six pending U.S. patent applications and 17 corresponding pending PCT and foreign patent applications directed to compositions of matter for CB-839 and related chemical compounds, as well as methods of using these compounds.
These pending patent applications also include one pending U.S. patent application relating to methods for measuring various biomarkers in cancer patients to identify patients suitable for treatment with glutaminase inhibitors.
With respect to CALA’s tumor immunology program, which includes the preclinical development of its arginase inhibitor, CALA considers trade secrets and know-how to be CALA primary intellectual property.
Trade secrets and know-how can be difficult to protect. Despite CALA’s efforts to protect its trade secrets, its competitors may discover its trade secrets, either through breach of its confidentiality agreements, independent development, or publication of information including its trade secrets.
Competition
CALA’s principal competitors in the field of tumor metabolism include Advanced Cancer Therapeutics, LLC, Agios Pharmaceuticals Inc., (NASDAQ:AGIO), Astrazeneca Plc (NYSE:AZN), Cornerstone Pharmaceuticals, Inc., Eli Lilly and Company (NYSE:LLY), Forma Therapeutics Holdings, LLC, Glaxosmithkline plc (NYSE:GSK), Novartis International AG (OTC:NVSEF), Pfizer Inc (NYSE:PFE), , 3-V Biosciences, Inc., and Roche Holding Ltd (OTC:RHHBY), and its subsidiary Genentech Inc.
CALA’s principal competitors in the field of tumor immunology include AstraZeneca plc, Ono Pharmaceuticals, Co., Ltd., NewLink Genetics Corporation, Incyte Corporation, Merck & Co., Bristol-Myers Squibb Company, CureTech Ltd, and EMD Serono, Inc.
5% shareholders pre-IPO
Entities affiliated with Delphi Ventures VIII, L.P. 19.5%
- Morgenthaler Venture Partners IX, L.P. 18.3%
- Advanced Technology Ventures VIII, L.P. 18.3%
- Adage Capital Management, LP 18.1%
- Entities affiliated with T. Rowe Price Associates, Inc. 7.2%
- Entities affiliated with Wellington Management Company, LLP 6.0%
- Longwood Fund II LP 5.8%
Dividend Policy
No dividends are planned.
Use of proceeds
CALA intends to use the $75 million in proceeds from its IPO as follows:
$25.0 to $35.0 million to further the clinical development of CB-839 through completion of Phase 2 clinical trials;
$10 to $15 million to further the development of its arginase inhibitor program through a Phase 1 clinical trial;
$5 to $10 million to fund its research and drug discovery activities related to additional product candidates, including the advancement of a third program to submission of an Investigational New Drug application; and
the remaining proceeds for working capital and general corporate purposes.
Disclaimer: This CALA IPO report is based on a reading and analysis of CALA’s S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.