IPO Preview: Fusion Pharmaceuticals Initiates IPO Effort

IPOStreet

Fusion Pharmaceuticals (FUSN) aims to raise $100 million in an IPO of its common stock, according to an S-1 registration statement.

The firm is a Phase 1 clinical stage biopharma company developing treatment candidates for solid tumor cancers.

FUSN is backed by some life sciences focused venture capital firms and JNJ.

When we learn more details from management about the IPO, I’ll provide an opinion.

Boston, Massachusetts-based Fusion was founded to advance a pipeline of treatments using its 'Targeted Alpha Therapies' platform to 'connect alpha particle emitting isotopes to antibodies and other targeting molecules in order to selectively deliver the alpha particle payloads to tumors.'

Management is led by founder and Chief Executive Officer John Valliant, Ph.D., who was previously CEO at the Centre for Probe Development and Commercialization, which he also founded.

Below is a brief overview video of the firm's approach:

Source: Fusion Pharmaceuticals

The firm's lead candidate, FPI-1434, is in Phase 1 monotherapy safety trials and seeks to deliver alpha particle payloads to solid tumors expressing IGF-1R (Insulin-like Growth Factor - 1 Receptor).

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

fusionpipe

Source: Company S-1 Filing

Investors in the firm have invested at least $103.4 million and include HealthCap, Varian Medical Systems (VAR), Johnson & Johnson (JNJ), Canada Pension Plan, TPG Biotechnology Partners, OrbiMed, and Seroba Life Sciences Fund.

According to a 2019 market research report by ResearchAndMarkets, the global market solid tumor treatments was an estimated $121.3 billion in 2018 and is expected to reach $424.6 billion by 2027.

This represents a forecast CAGR (Compound Annual Growth Rate) of 15.0% from 2019 to 2027.

Key elements driving this expected growth are a rising prevalence of breast cancer and lung cancer worldwide as well as increasing reimbursement policies and significant development activities by biopharmaceutical firms.

Major competitive vendors that provide or are developing treatments include:

  • Bayer (BAYRY)
  • Novartis (NVS)
  • Actinium Pharmaceuticals (ATNM)
  • RadioMedix
  • Orano Med
  • Telix Pharmaceuticals (TLPPF)
  • Progenics Pharmaceuticals (PGNX)
  • Q BioMed (QBIO)
  • Ipsen (IPSEY)
  • Y-mAbs Therapeutics (YMAB)
  • Clovis Oncology (CLVS)

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

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

fusionpl

Source: Company registration statement

As of March 31, 2020, the company had $67.4 million in cash and $16.8 million in total liabilities. (Unaudited, interim)

Fusion 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 yet indicated an interest to purchase shares of the IPO, although I would expect to see this typical form of investor support in a future filing.

Management says it will use the net proceeds from the IPO to fund the development of its FPI-1434 monotherapy, to advance the development of combination therapies of FPI-1434 with checkpoint inhibitors and DDRIs, including PARP inhibitors, to advance FPI-1966, to further develop and expand its pipeline and the remainder to fund working capital.

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

Listed bookrunners of the IPO are Morgan Stanley, Jefferies, Cowen, and Wedbush PacGrow.

Commentary

Fusion is seeking a typical biopharma IPO transaction to advance its early stage pipeline through Phase 1 trials.

The firm’s lead candidate, FPI-1434, is in Phase 1 trials and initial data readout is expected within 3 - 6 months, assuming no Covid19 pandemic related delays.

Its second candidate is hopeful for entry into Phase 1 trials in 6 - 9 months.

The global market opportunity for solid tumor treatments is enormous, probably the single largest cancer market by a wide margin.

Management has disclosed no commercial collaborations, but the company has investment from Johnson & Johnson Development Corporation.

Additionally, Fusion’s investor syndicate is large and contains other high quality venture capital firms.

Morgan Stanley is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 46.3% since their IPO. This is a top-tier performance for all major underwriters during the period.

When we learn more details about this early stage biopharma’s IPO pricing and valuation expectations, 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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