IPO Preview: ALX Oncology Starts U.S. IPO Effort

IPOStreet

ALX Oncology Holdings (ALXO) aims to raise $100 million in an IPO of its common stock, according to an S-1 registration statement.

The company is a clinical stage firm developing CD47 checkpoint inhibitor drug candidates for a variety of cancer conditions.

ALXO’s candidate ALX148 has produced promising Phase 1b trial results and has received FDA Fast Track designation for certain cancer indications.

I’ll provide a final opinion when we learn more IPO details.

Burlingame, California-based ALX was founded to advance a pipeline of drug treatments seeking to negate the ability of certain cancer cells to avoid detection via CD47 checkpoints.

Management is headed by president and Chief Executive Officer Jaume Pons, Ph.D, who has been with the firm since April 2015 and was previously Senior Vice President at Pfizer (PFE) and Chief Scientific Officer at Rinat Neuroscience, a subsidiary of Pfizer.

Below is a brief overview video of CD47 proteins:

Source: Stanford Cancer Institute

The firm's candidate, ALX148, is being developed to treat myelodysplastic syndromes [MDS] and acute myeloid leukemia [AML].

Management intends to advance ALX148 as a monotherapy as well as in conjunction with other treatments, for non-Hodgkin's lymphoma and various solid tumor conditions.

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

alxpipe

Source: Company S-1 Filing

Investors in the firm have invested at least $180 million and include venBio, Lightstone Ventures, Vivo Capital and Logos Opportunities Fund, among others.

According to a 2019 market research report by MarketsandMarkets, the global market for leukemia therapeutics was an estimated $12.3 billion 2019 and is expected to exceed $17 billion by 2024.

This represents a forecast CAGR (Compound Annual Growth Rate) of 6.8% from 2019 to 2024.

Key elements driving this expected growth are a growing incidence of disease among an aging global population, a broader set of treatment options amid growing awareness and distribution of treatments.

Below is a chart that shows the historical activity and forecast growth of leukemia treatments by year and region:

leukemia_market

Also, the global head and neck squamous cell cancer market is expected to reach $4.5 billion by 2027.

This represents a CAGR forecast of 17.3% from 2020 to 2027 and is due to tobacco use, alcohol consumption, human papillomavirus infection and Epstein-Barr virus infection.

Emerging market countries are expected to play a growing role in providing growth opportunities for treatment providers in the market.

Major competitive vendors that provide or are developing treatments include:

  • AstraZeneca (AZN)
  • Bristol-Myers Squibb (BMY)
  • Gilead Sciences (GILD)
  • Merck (MRK)
  • Novartis (NVS)
  • Pfizer (PFE)
  • Roche (RHHBY)
  • Other firms developing the CD47 pathway for other diseases

ALX’s recent financial results are typical of a clinical stage biopharma due to minimal revenue and significant R&D and G&A expenses associated with its research activities.

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

alxpl

Source: Company registration statement

As of March 31, 2020, the company had $105.0 million in cash and $9.3 million in total liabilities. (Unaudited, interim)

ALX 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 such investor ‘support’ for the IPO.

Management says it will use the net proceeds from the IPO as follows:

to advance the clinical development of ALX148 through completion of our existing Phase 1b clinical trials in HNSCC and gastric/GEJ cancer;

to advance the clinical development of ALX148 through initiation and completion of our Phase 1b/2 combination clinical trial in MDS;

to advance the clinical development of ALX148 through initiation and completion of our Phase 1b/2 combination clinical trial in AML;

for manufacturing activities related to chemistry, manufacturing and controls, or CMC, activities;

to advance the clinical development of ALX148 through initiation and completion of our Phase 2 combination clinical trials in HNSCC and gastric/GEJ cancer or alternative Phase 2 indications if there are compelling clinical data; 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 Jefferies, Credit Suisse, Piper Sandler, Cantor and LifeSci Capital.

Commentary

ALX is seeking a typical life science IPO transaction size to advance its early stage but ambitious pipeline of treatment candidate trials.

The firm’s sole candidate, ALX148, is being trialed as a monotherapy as well as in conjunction with other treatments, for non-Hodgkin's lymphoma and various solid tumor conditions.

ALX148 has produced promising Phase 1b trial results and has received FDA Fast Track designation for certain cancer indications

The market opportunities for these various treatment needs are significant and expected to grow materially in the years ahead and the global population ages and incidence of various cancers rises due to reduced immune system function as people age.

The firm had a collaboration agreement with Tallac Therapeutics, but that agreement ceased July 1, 2020.

While ALXO is pursuing a number of trial activities in conjunction with other drugs, the firm has no official collaboration relationships with major pharma companies.

Jefferies is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 130.3% since their IPO. This is a top-tier performance for all major underwriters during the period.

When we learn more about the IPO, I’ll provide a final opinion.

Expected IPO Pricing Date: To be announced.

Glossary Of Terms

(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 incomplete or out of date, and does not constitute financial, legal, or investment advice.)

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