IPO Launch: Inhibikase Aims For $25 Million IPO

IPOStreet

Inhibikase Therapeutics (IKT) has filed to raise $25 million from the sale of its common stock in an IPO, according to an amended registration statement.

The company is advancing a pipeline of treatment candidates for neurodegenerative and cancer diseases.

IKT is still at a preclinical stage of development, is thinly capitalized and the IPO may be more suited to long-term hold institutional investors.

Atlanta, Georgia-based Inhibikase was founded to develop small molecule inhibitory drugs to treat Parkinson's Disease, cancer and other conditions.

Management is headed by founder, president and Chief Executive Officer Mr. Milton Werner, Ph.D., who was previously Director of Research at Celtaxsys, a cell-free immunotherapeutics company.

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

Source: Osmosis

The firm's lead candidate is IkT-148009 and management is planning to enter Phase 1 safety trials for four indications through two INDs.

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

inhibikasepipe

Source: Company S-1 Filing

Investors in the firm have invested at least $7.6 million and include Dr. Milton Werner, Duke University, Emory University and Daniel Kalman, Ph.D.

According to a 2018 market research report by Transparency Market Research, the global PD therapeutics market was valued at $2.18 billion in 2016 and is projected to reach $5.24 billion by 2025.

This represents a forecast CAGR (Compound Annual Growth Rate) of CAGR of 11% between 2017 and 2025.

Key elements driving this expected growth are the high prevalence of PD, increasing geriatric population globally, as well as an increase in funding for clinical research and grants among others.

The North American and European regions are expected to dominate the worldwide PD therapeutics market due to rise in clinical R&D budgets, the large base of an aging population, as well as increase in awareness regarding the disease in these regions.

The European region is anticipated to grow at the fastest rate of over 11% annually during the period due to various awareness initiatives by governments and non-profit organizations, high prevalence of PD in the developed countries, as well as a promising product pipeline.

Also, researchers estimate that PD affects around 7 to 10 million people worldwide, around 1 million of which are US citizens, while the Global Burden of Disease Study expects the disease to affect 13 million people worldwide by 2040.

Major competitive vendors that provide or are developing treatments include:

  • Prothena
  • Roche Holdings
  • Biogen
  • Neurimmune Holding
  • UCB
  • Neuropore Therapies
  • Sanofi
  • Takeda Pharmaceutical Company
  • Denali Therapeutics
  • Prevail Therapeutics

Inhibikase’s recent financial results feature some grant revenue but significant losses due to typical R&D and G&A expenses associated with its development activities.

Below are the company’s financial results for the past two calendar years:

inhibikasepl

Source: Company registration statement

As of December 31, 2019, the company had $18,457 in cash and $4.5 million in total liabilities. (Unaudited, interim)

IKT intends to sell 2.3 million shares of common stock at a midpoint price of $11.00 per share for gross proceeds of approximately $25 million, not including the sale of customary underwriter options.

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 at the midpoint of the proposed price range, the company’s enterprise value at IPO would approximate $115.7 million.

Excluding effects of underwriter options and private placement shares or restricted stock, if any, the float to outstanding shares ratio will be approximately 21.62%.

Per the firm’s most recent regulatory filing, it plans to use the net proceeds as follows:

approximately $4.5 million to fund the costs of our Phase 1 clinical trial for IkT-148009 in elderly healthy volunteers and to validate target engagement markers in the central and peripheral nervous system;

up to $5.0 million for a Phase 1b study in treatment naïve and early stage PD patients with GI complications, subject to FDA approval;

approximately $4.0 million to fund comparative pivotal chronic toxicology studies of IkT-148009 v. Imatinib in rats for 3 and 6 months and monkeys for 3 and 9 months to meet regulatory requirements for Phase 2 studies;

up to $3.0 million for IkT-148009 Phase 2 proof-of-concept site evaluation, enrollment and preparation;

approximately $3.6 million to complete cGMP manufacturing of IkT-001Pro, prepare and complete the IND for IkT-001Pro and to conduct clinical dose-calibration studies for IkT-001Pro relative to Imatinib and evaluate safety and tolerability benefits in patients with Stable-phase CML;

approximately $42,534 to repay a loan with a maturity date of January 1, 2021 and bearing an interest rate of 5.25 % from our former outside counsel which matures coincident with this offering; and

the remainder, to fund general research and development activities, medicinal chemistry for additional molecules and IND-enabling, team building, working capital and other general corporate activities including open accounts payable to include costs for intellectual property prosecution and legal expenses accrued in preparation for this public offering.

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

The sole listed underwriter of the IPO is ThinkEquity.

Commentary

IKT is seeking public investment to advance its pipeline and several lead candidates into Phase 1 safety trials.

The firm’s lead candidate seeks to treat Parkinson’s Disease, an area that has proven difficult for even major pharma firms to make progress.

The market opportunity for the treatment of PD is substantial and expected to grow at a significant rate over the coming years as the number of patients grows.

The firm has developed a number of research collaborations with academic experts, including those at Rush University and Louisiana State University.

ThinkEquity is the sole underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 1.8% since their IPO. This is a middle-tier performance for all major underwriters during the period.

As to valuation, the firm is seeking a lower than typical valuation for a life science company at IPO.

IKT is operating in a tough treatment area for progress and is still at a preclinical stage of development for its lead programs.

The IPO may be more suited to institutional investors with a long-term hold time frame, so my opinion is to AVOID it.

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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