IPO Preview: Akouos Begins U.S. IPO Process

IPOStreet

Akouos (AKUS) intends to raise $100 million in an IPO of its common stock, according to an S-1 registration statement.

The company is developing treatments for genetic-based hearing loss.

AKUS won’t enter trials for its lead candidate until 2021, with initial data readout not until 2022, so the IPO is likely more suited to institutional investors.

I’ll provide an update when we learn more about the IPO from management.

Boston, Massachusetts-based Akouos was founded to create a precision genetic medicine platform to develop AAV-delivered gene therapies for various types of hearing loss.

Management is led by co-founder, president and CEO Emmanuel Simons, Ph.D, who was previously in senior roles at Voyager Therapeutics and Warp Drive Bio.

Below is an interview of co-founder and CEO Simons:

Source: Harvard Business School

The firm's lead candidate, AK-OTOF, is in preclinical development stage for the treatment of OTOF-mediated hearing loss.

Below is the current status of the company’s drug development pipeline:

akouospipe

Source: Company S-1 Filing

Investors in the firm have invested at least $162.7 million and include 5AM Ventures, New Enterprise Associates, Novartis Venture Fund (NVS), Partners Innovation Fund, RA Capital Management, Sofinnova Investments and a number of other venture capital and private equity firms.

According to management, it believes the addressable market for its AK-OTOF treatment is approximately 7,000 individuals, 'which is a subset of the total population of individuals with hearing loss due to mutations in the otoferlin, or OTOF, gene in the United States and European Union in the aggregate.'

Major competitive vendors that provide or are developing treatments include:

  • Decibel Therapeutics
  • Frequency Therapeutics
  • Otonomy
  • Applied Genetic Technologies
  • Sensorion SA

Management says its approach to developing treatments for various inner ear disorders is a function of leveraging its selection platform.

The firm intends to also seek the development of genetic treatments for 'the most common forms of hearing loss, such as age-related and noise-induced hearing loss.’

Akouos’ recent financial results are typical of a preclinical stage biopharma in that they feature no revenue and significant R&D and G&A costs associated with advancing its pipeline of treatment candidates.

Below are the company’s financial results for the past two and ¼ years (Audited PCAOB for full years):

akouospl

Source: Company registration statement

As of March 31, 2020, the company had $120.2 million in cash and $21.7 million in total liabilities. (Unaudited, interim)

Akouos intends to raise $100 million in gross proceeds from an IPO of its common stock, although the final amount may be different.

No existing shareholders have indicated an interest to purchase shares at the IPO price, although I would expect to see this typical form of investor ‘support’ in a later filing.

Management says it will use the net proceeds from the IPO to ‘advance the clinical development of AK-OTOF for the treatment of OTOF-mediated hearing loss, to initiate clinical development of our additional product candidates, anti-VEGF, CLRN1, and GJB2, to continue preclinical development of our other product candidates and development programs, including our autosomal dominant hearing disorder and our hair cell regeneration programs, to establish internal manufacturing capabilities of 250-liter capacity, and the remainder for working capital and other general corporate purposes.’

Management’s presentation of the company roadshow is not available.

Listed bookrunners of the IPO are BofA Securities, Cowen, Piper Sandler & Co., and BTIG.

Commentary

Akouos is seeking a public investment capital for its preclinical stage pipeline of genetic treatment candidates for hearing loss.

However, the firm’s lead candidate won’t get into Phase 1 safety trials until at least 2021 and management expects preliminary data readout in 2022, assuming no Covid19 delays.

The market opportunities for various genetic hearing loss conditions are significant, although the longer term hope is that the firm can apply its knowledge to developing treatments for more common hearing loss conditions.

Management has disclosed no development or commercial collaborations, but the firm’s investor syndicate includes big pharma firm Novartis.

Added to that, AKUS’ investor syndicate is quite large and includes some highly respected life science investor names.

BofA Securities is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 41.6% since their IPO. This is a top-tier performance for all major underwriters during the period.

Due to the firm’s preclinical stage of development, the IPO may be more suited to long-term holding institutional investors, as the IPO appears to be more of a venture financing round.

When we learn more details about the IPO’s pricing and valuation assumptions, I’ll provide a final opinion.

Expected IPO Pricing Date: To be announced.

(I have no position in any stocks mentioned as of the article date, no plans to initiate any positions within the next 48 hours, and no business relationship with any company whose stock is mentioned in this article. Information provided is for educational purposes only, may be incomplete or out of date, and does not constitute financial, legal, or investment advice.)

-----

To receive automatic notification of new IPO activity, click the "+ Follow" link at the top right of the page.

Comments

News

FEATURED
COMMUNITY