IPO Preview: Checkmate Pharmaceuticals Commences $75 Million IPO Effort

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Checkmate Pharmaceuticals (CMPI) has filed to raise $75 million in an IPO of its common stock, according to an S-1 registration statement.

The company is a clinical stage biopharma advancing a drug treatment candidate for melanoma and head & neck cancer.

CMPI achieved positive results in early trials and has important collaborations with major pharmaceutical companies.

Cambridge, Massachusetts-based Checkmate was founded to develop its CMP-001 candidate, a Toll-like receptor 9, TLR9 'agonist delivered as a biologic virus-like particle, or VLP.'

Management is headed by Barry Labinger, who has been with the firm since December 2018 and was previously president and CEO of Biothera Pharmaceuticals, a clinical stage cancer immunotherapy company.

Here is a brief snapshot of skin cancers:

Source: Osmosis

The firm's drug candidate 'is designed to trigger the body's innate immune system ... and directing activated anti-tumor T cells to attack both the injected tumor and also tumors throughout the body.'

CMP-001 has produced a 'best overall response rate of 28%, including post-progression responders.'

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

checkmatepipe

Source: Company S-1 Filing

At least $191 million has been raised from the firm's investors including Sofinnova Ventures, venBio, Novo Holdings, Longitude Capital Partners, Decheng Capital, F-Prime Capital, Medicxi and Omega Fund.

The global demand for melanoma therapies is projected to hit $5.9 billion by 2023, according to a Research And Markets 2018 market research report.

This reflects a forecast of 12.62 per cent CAGR ( Compound Annual Growth Rate) from 2018 to 2023.

Continued exposure to ultraviolet light and population aging are key factors driving this anticipated increase leading to decreased immune system functioning.

The HNSCC (Head and Neck Squamous Cell Carcinoma) market is also projected to hit $4.5 billion by 2027, rising at a estimated 17.3 percent from 2020 to 2027.

Therefore, the combined markets for the drug treatment pipeline of the business are expected to rise to around $10.4 billion by the late 2020s.

Large competitive vendors selling or developing treatments would include:

  • Dynavax
  • Exicure (XCUR)
  • Idera Pharmaceuticals (IDRA)
  • Amgen (AMGN)

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

The financial statements for the last two and 1⁄4 years of the company (Audited PCAOB for full years) are below:

checkmatepl

Source: Company registration statement

The company had $3.9 million in cash and $5.0 million in total liabilities as of March 31 , 2020. (Interim (Unaudited)

Checkmate plans to raise gross proceeds of $75 million from an IPO of its common stock, but the final sum can vary.

No current shareholders have indicated an interest in buying shares at the IPO price, although if disclosed in future filing this item may become an IPO feature.

The management says the net proceeds from the IPO will be used as follows:

to fund the completion of a Phase 2 PD-1 refractory melanoma study and supporting studies to enable a potential submission of a Biologics License Application seeking accelerated approval;

to fund the development of CMP-001 in PD-1 naïve front-line melanoma;

to fund the completion of a Phase 2 proof of concept study in head and neck squamous cell carcinoma; and

the remainder for working capital and general corporate purposes.

The presentation of the company roadshow by the Management is not available.

Listed bookrunners of the IPO are BofA Securities, Jefferies, BMO Capital Markets and BTIG.

Commentary

Checkmate is seeking funds from the public capital market to develop its drug candidate CMP-001 programs for treating different cancers.

The lead candidate is being evaluated as a front-line, refractory, and adjuvant drug. In its current trials it has produced positive overall response rate results.

The market potential to treat the targeted cancers is large and is projected to rise significantly in the years ahead, hitting more than $10 billion by the late 2020's if forecasts are correct.

The firm has developed a clinical collaboration with Merck and Pfizer for testing CMP-001 in conjunction with avelumab.

The investor syndicate of the company comprises a range of well-known and highly regarded investment companies in biotech.

BofA Securities is the lead-left underwriter and company-led IPOs have produced an average return of 47.4 percent since their IPO over the last 12 months. This is a top-tier performance for all major underwriters during the period.

I look forward to learning more details about the IPO from management.

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

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