IPO Launch: Athira Pharma Reaches For $160 Million IPO

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Athira Pharma (ATHA) aims to raise $160 million in an IPO of its common stock, according to an S-1 registration statement.

The firm is developing treatment candidates for Alzheimer's and Parkinson's Disease.

ATHA has produced promising early stage trial results in notoriously difficult therapeutic areas.

Seattle, Washington-based Athira was founded to advance a pipeline of treatments for major neurological diseases, neuropsychiatric indications and neuropathies.

Management is headed by Chief Executive Officer Ms. Leen Kawas, Ph.D, who has been with the firm since January 2014 and was previously co-chair of the International Alzheimer's Association Business Consortium.

Below is a brief overview video of Alzheimer's Disease:

Source: Osmosis

The firm's lead candidate is ATH-1017, being developed for the treatment of Alzheimer's Disease [AD] and Parkinson's Disease and Dementia [PDD].

In its Phase 1 and 1b trials, management noted that 'all AD subjects tested had improved P300 latency, and by the end of an 8-day treatment cycle, average P300 latency across the AD treatment group had improved by 73 milliseconds, a statistically significant change compared to a placebo group that did not show any significant directional change.'

Management expects initial topline data from its Phase 2 clinical trial for the treatment of PDD by the end of 2022.

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

athirapipe

Source: Company S-1 Filing

Investors in the firm have invested at least $92.5 million and include Perceptive Life Sciences, RTW Investments, Viking Global Opportunities, and Franklin Templeton Investments.

According to a 2020 market research report by Market Insight Reports, the global market for Alzheimer's Disease was an estimated $2.9 billion in 2018 and is expected to reach $10.5 billion by 2025.

This represents a forecast CAGR (Compound Annual Growth Rate) of CAGR of 17.5% from 2019 to 2025.

Key elements driving this expected growth are the aging global population and increasing incidence of Alzheimer's and related dementia diseases.

Also, Parkinson's Disease is expected to reach $5.7 billion in size by 2022, growing at an estimated CAGR of 6.1%.

Major competitive vendors that provide or are developing treatments include:

  • Mitsubishi Tanabe
  • AnGes
  • PharmatrophiX

Management says it does not view monoclonal antibodies under development by large pharma firms (Biogen, Lilly and Roche) as competitors, 'but potential as complementary to our approach.'

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

Below are the company’s financial results for the past two and ½ years (Audited PCAOB for full years):

athirapl

Source: Company registration statement

As of June 30, 2020, the company had $85.2 million in cash and $6.9 million in total liabilities. (Unaudited, interim)

Athira intends to raise $160 million in gross proceeds from an IPO of its common stock, selling 10 million shares at a proposed midpoint price of $16.00 per share.

No existing shareholders have indicated an interest to purchase shares at the IPO price, a common feature of life science IPOs.

Assuming a successful IPO, the company’s enterprise value at IPO would approximate $375.9 million, excluding the effects of underwriter over-allotment options.

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

approximately $75.0 million to fund the clinical development of ATH-1017 including the LIFT-AD trial and the ACT-AD P300 Phase 2 trial for the treatment of mild-to-moderate Alzheimer’s disease;

approximately $20.0 million to fund our planned Phase 2 trial of ATH-1017 for the treatment of Parkinson’s disease dementia;

approximately $30.0 million to fund our IND-enabling studies of ATH-1019 for the treatment of neuropsychiatric indications and ATH-1018 for the treatment of neuropathy; and

the remainder for our other research and development activities, as well as for working capital and other general corporate purposes.

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

Listed bookrunners of the IPO are Goldman Sachs, Jefferies, Stifel and JMP Securities.

Commentary

Athira is seeking public capital market funding to advance its pipeline into Phase 2 trials.

The firm’s lead candidate has shown promising safety and efficacy response results in early trials.

The market opportunity for treating Alzheimer’s and Parkinson’s diseases is large and expected to grow substantially in the years ahead, with AD presenting the largest potential market.

Management has disclosed no research or commercial collaborations to-date, so is pursuing a ‘go-it-alone’ approach at this time. It’s lead candidate may be complementary to other drugs in the market or under development.

The company’s investor syndicate includes noted firm Perceptive Life Sciences, an active biopharma investor.

Goldman Sachs is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 63.9% since their IPO. This is a top-tier performance for all major underwriters during the period.

As to valuation, the IPO is valued within the typical range for biopharma IPOs, so the valuation appears reasonable.

For life science investors with a very long-term hold time-frame of 18 to 36 months, my opinion on the IPO is a BUY at up to $16.00 per share.

Expected IPO Pricing Date: September 17, 2020.

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

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