IPO Preview: Applied Molecular Transport Starts U.S. IPO Effort

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Applied Molecular Transport (AMTI) has filed to raise $100 million in an IPO, according to an S-1 registration statement.

The firm is advancing drug candidates for the treatment of a range of autoimmune and other diseases.

AMTI has produced very promising improvement in limiting the toxicity of treatment of ulcerative colitis.

South San Francisco, California-based Applied was founded to develop drugs that provide therapeutic effects via facilitating payloads across the intestinal epithelium barrier.

Management is headed by co-founder and CEO Mr. Tahir Mahmood, Ph.D., who was previously Life Sciences Practices Leader at Booz Allen Hamilton and a Director at MiNDERA Corporation, a non-invasive skin genomics company.

Below is a brief overview video of ulcerative colitis:

Source: Animated IBD Patient

The firm's lead candidate, AMT-101, is an oral IL-10 fusion protein designed for active transport across the IE barrier into local GI tissue while not entering the bloodstream, to treat ulcerative colitis without the toxicity effects associated with systemic administration.

Notably, in a positive aspect of the Phase 1b safety trials, there were 'only negligible levels of AMT-101 detected in systemic circulation.'

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

appliedpipe
Source: Company S-1 Filing

Investors in the firm have invested at least $105 million and include EPIQ Capital Group, Founders Fund and Sheatree Direct.

According to a 2017 market research report by Allied Market Research, the market for ulcerative colitis was $4.8 billion in 2016 and is expected to reach $7.5 billion by 2023.

This represents a forecast CAGR (Compound Annual Growth Rate) of 6.5% from 2017 to 2023.

Key elements driving this expected growth are a growing prevalence of the disease affecting people globally as well as increased development efforts by pharmaceutical firms for novel treatments coupled with increasing awareness of treatment options.

Major competitive vendors that provide or are developing treatments include:

  • Johnson & Johnson (JNJ)
  • GlaxoSmithKline (GSK)
  • Eli Lilly & Co (LLY)
  • Sanofi Aventis (SNY)
  • Merck (MRK)
  • InDex Pharmaceuticals
  • Ajinomoto Pharmaceuticals (AJINF)
  • Abbott Laboratories (ABT)
  • Avaxia Biologics
  • AbbVie (ABBV)
  • Arena Pharmaceuticals

Applied’s recent financial results are typical of clinical stage biopharma firms in that they feature no revenue and significant R&D and G&A expenses associated with its development programs.

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

amtipl
Source: Company registration statement

As of March 31, 2020, the company had $16.1 million in cash and $8.5 million in total liabilities. (Unaudited, interim)

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

Management says it will use the net proceeds from the IPO to fund its AMT-101 trial process and development of AMT-126 as well as for general corporate purposes.

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

Listed bookrunners of the IPO are BofA Securities, Jefferies, and SVB Leerink.

Commentary

Applied is seeking a typical IPO transaction from public investors in the U.S to fund Phase 2 trials for various programs related to its primary candidate, AMT-101.

The firm’s lead candidate has shown promising results in early Phase 2b trials by avoiding crossing into the bloodstream, thereby creating higher toxicity.

The market opportunity for Ulcerative colitis is moderate in size with a reasonable growth rate. Management is pursuing other related markets with the same compound, increasing the potential total addressable market.

AMTI has no disclosed development or commercial collaborations. It is ideal in my view to have at least one collaboration partner, though not dispositive.

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 21.8% since their IPO. This is a top-tier performance for all major underwriters during the period.

One of the firm’s venture capital firm investors is the Founders Fund, a firm founded by Peter Thiel but not usually associated with pure biopharma firm investing.

When we learn management’s assumptions on pricing and valuation for the IPO, I’ll provide an update.

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.)

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