IPO Launch: Aligos Therapeutics Readies $150 Million U.S. IPO
Aligos Therapeutics (ALGS) intends to raise $150 million in an IPO of its common stock, according to an S-1 registration statement.
South San Francisco, California-based Aligos was founded to develop a functional cure for Hepatitis B and other liver and viral diseases.
Management is headed by co-founder and CEO Mr. Lawrence Blatt, Ph.D., who was previously Global Head of Infectious Diseases and Vaccines at Janssen Pharmaceutical Companies, a subsidiary of Johnson & Johnson (JNJ).
Below is a brief overview video of Hepatitis B:
Source: Columbia University Department of Surgery
The firm's lead candidate, ALG-010133, is currently being tested in Phase 1 safety trials for the treatment of Hepatitis B, which more than 290 million people worldwide suffer from.
Aligos has seen 'higher inhibitory activity than a reference NAP compound in nonclinical studies.’
Below is the current status of the company’s drug development pipeline:
Source: Company S-1 Filing
Investors in the firm have invested at least $182 million and include Roche, Versant Ventures, Baker Bros., Vivo Capital, Novo Holdings and Wellington Management.
According to a 2018 market research report by Grand View Research, the global market for Hepatitis B treatments was an estimated $19.6 billion in 2016.
The market is forecast to grow at a relatively slow CAGR of 2.7% from 2018 to 2025.
Key elements driving this expected growth are a rise in the prevalence of viral hepatitis and growth in healthcare spending worldwide.
Also, the chart below shows the historical and expected future market composition of the three types of hepatitis in the U.S.
Major competitive vendors that provide or are developing treatments include:
- Gilead Sciences (GILD)
- Bristol-Myers Squibb (BMY)
- Arbutus Biopharma (ABUS)
- Dicerna Pharmaceuticals (DRNA)
- Arrowhead Pharmaceuticals (ARWR)
- Assembly Biosciences (ASMB)
- Altimmune (ALT)
- Dynavax Technologies (DVAX)
- Vir Biotechnology (VIR)
Aligos’s recent financial results are typical of a clinical stage biopharma in that they feature no revenue and significant R&D and G&A costs associated with advancing its programs through clinical trials.
Below are the company’s recent financial results:
Source: Company registration statement
As of June 30, 2020, the company had $22.7 million in cash and $29.9 million in total liabilities. (Unaudited, interim)
Aligos intends to raise $150 million in gross proceeds from an IPO of ten million shares of its common stock, offered at a proposed midpoint price of $15.00 per share.
No existing shareholders have indicated an interest to purchase shares at the IPO price. Such investor ‘support’ is a common feature in life science IPOs.
Assuming a successful IPO, the company’s enterprise value at IPO would approximate $443.5 million, excluding the effects of underwriter over-allotment options.
Management says it will use the net proceeds from the IPO as follows:
approximately $40.0 million to $43.0 million to advance our STOPS candidate, ALG-010133, including to fund the Phase 1 clinical trial and drug product manufacturing activities;
approximately $35.0 million to $38.0 million to advance our CAM candidate, ALG-000184, including to fund the Phase 1 clinical trial and drug product manufacturing activities;
approximately $12.0 million to $15.0 million to advance our ASO candidate, ALG-020572;
approximately $20.0 million to $25.0 million to advance our siRNA candidate, ALG-125097;
approximately $12.0 million to $14.0 million to advance our NASH THR-b candidate, ALG-055009; and
the remainder (if any) to fund discovery and research to broaden our pipeline of drug and backup candidates, including other discovery candidates for viral and liver diseases, development of our technology platform, and any potential future combination or other clinical trials and nonclinical studies.
Management’s presentation of the company roadshow is available here.
Listed bookrunners of the IPO are J.P. Morgan, Jefferies, Piper Sandler, and Cantor.
Aligos is seeking a larger than typical biopharma IPO transaction size to advance its several Hepatitis B programs through trials.
The firm is developing several versions of drugs using different mechanisms of action [MOAs]
The market opportunity for treating Chronic Hepatitis B is quite large, though slow growing.
Management has disclosed no commercial or research collaborations with major pharma firms, so is pursuing a go-it-alone approach at present.
The company’s investor syndicate includes a number of well-known life science venture capital firms as well as strategic major pharma investor Roche, lending credence to the company’s technology promise.
J.P. Morgan is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 65.6% since their IPO. This is a top-tier performance for all major underwriters during the period.
As to valuation, management is asking IPO investors to pay an enterprise value of $444 million at IPO. This is within the typical range of a biopharma IPO, so it is not unreasonable.
Given the firm’s early trial efficacy results, its large market size, top investor syndicate and reasonable IPO price, for life science investors with an 18 to 24-month time frame, my opinion on the IPO is a BUY at up to $15.00 per share.
Expected IPO Pricing Date: October 15, 2020
(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. IPO stocks can be very volatile in the days immediately after an IPO. Information provided is for educational purposes only, may be in error, incomplete or out of date, and does not constitute financial, legal, or investment advice.)
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