IPO Launch: Inhibrx Aims For $102 Million IPO

IPOStreet

According to an amended registration statement, Inhibrx (INBX) has filed to raise $102 million from the sale of its common stock at an IPO.

The company is advancing a pipeline of candidates for the treatment of various rare cancers and AATD.

INBX is still in phase 1 safety studies and the IPO is priced above the standard range for biopharmaceutical IPOs.

La Jolla, California-based Inhibrx was established to create candidates for antibody drugs to treat chondrosarcoma and mesothelioma, among other cancers.

Management is led by Mr. Mark Lappe, co-founder, president, CEO and chairman, who was previously founding and managing partner of the Efficacy Biotech Fund.

Below is a brief snapshot of chondrosarcoma:

Source: uvahealth

The lead candidate for the firm is INBRX-109, a tetravalent DR5 that is being tested on chondrosarcoma and mesothelioma patients.

Single agent cohort data is expected in Q4 2020 while initial combination cohort data are not expected until the first half of 2021.

The current status of the drug development pipeline at the company is as follows:

inhibrxpipe2

Source: Company S-1 Filing

The firm's investors have invested at least $59 million such as the LAV Summit, RA Capital and Quinn Deveraux.

The global market for chondrosarcoma treatments is expected to reach $538 million by 2023, according to a market research report published by Market Research Future in 2020.

This represents a CAGR (Compound Annual Growth Rate) forecast of 3.1 per cent between 2020 and 2013.

An increased source of funding for research and development of new treatment options and increasingly rapid approvals by regulatory bodies are key elements driving this expected growth.

In addition, below is a pie breakdown by subtype of the different types of chondrosarcoma:

inhibrxmkt

Major competitive vendors that provide or are developing treatments include:

  • Alligator Bioscience (OTC: ALLGF)
  • Camel-IDS
  • Crescendo Biologics
  • GlaxoSmithKline (GSK)
  • IGM Biosciences (IGMS)
  • Molecular Partners
  • Pieris Pharmaceuticals (PIRS)
  • Sanofi (SNY)
  • VHsquared

Recent financial results from Inhibrx are atypical of a biopharmaceutical company at IPO in the sense that the company has received some license fees and revenues that help offset some of the significant R&D and G&A expenses related to its pipeline development efforts.

Below are the financial results for the past two and a half years (Full-year audited PCAOB):

inhibrxpl

Source: Company registration statement

The firm had $5.6 million in cash and $88.3 million in total liabilities as of June 30th, 2020. (Interim (Unaudited)

INBX intends to sell six million shares of common stock at a midpoint price of $17.00 per share for gross proceeds of approximately $102 million, not including the sale of customary underwriter options.

No existing shareholders indicated an interest in buying shares at the IPO price, a common feature of successful IPOs in the life sciences.

Assuming a successful IPO at the midpoint of the proposed price range, the enterprise value at IPO for the company would be about $704.7 million.

With the exception of the effects of underwriter options and private placement shares or limited stock, if any, the float ratio to outstanding shares will be around 16.83%.

It plans to use the net proceeds as follows according to the company's most recent regulatory filing:

approximately $30.0 million to fund the remainder of dose expansion in our ongoing Phase 1 clinical trial for our INBRX-109 program to initial data, initiate combination studies as well as to fund commercial manufacturing scale-up activities;

approximately $10.0 million to fund the remainder of dose escalation in our ongoing Phase 1 clinical trial for our INBRX-106 program to initial data, for both single agent and in combination with Keytruda;

approximately $10.0 million to fund the remainder of dose escalation in our ongoing Phase 1 clinical trial for our INBRX-105 program to initial data and to fund commercial manufacturing scale-up activities;

approximately $25.0 million to fund the remainder of our ongoing Phase 1 clinical trial for our INBRX-101 program to initial data and to fund commercial manufacturing scale-up activities; and

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

The company roadshow presentation by the Management is not available.

Jefferies, Evercore ISI, Credit Suisse and LifeSci Capital are the listed underwriters of the IPO.

Commentary

INBX is seeking an above-average IPO transaction size for a biopharma firm.

For its lead candidate, INBRX-109, management is expecting single agent cohort data by the end of 2020 and combination agent cohort data by 1H 2021.

The market opportunity for chondrosarcoma treatment is expected to reach $538 million and $600 million for mesothelioma, so individual market sizes are not extremely large but the combination of the markets is significant.

The company has third-party partnerships in China , Hong Kong, Macau and Taiwan for development and commercialization efforts.

The investment syndicate of the company includes RA Capital, an active investor in life science and general-technology firms in their later development stages.

Jefferies is the lead left underwriter and the company-led IPOs have generated an average return of 71.9 percent since their IPO over the last 12-month period. This is a top level performance during the period for all major underwriters.

As for valuation, management is seeking a $705 million enterprise value at the IPO which is beyond the typical range for biopharmaceutical IPOs.

The firm is still in Phase 1 safety trials stage so is still very early in its trials process.

INBX hasn't provided details on early stage effectiveness, even in preclinical or in vivo testing, so we don't really have a scrap of data to form an opinion on.

Accordingly, given the lack of trial results and the out-of-range enterprise value for the IPO, my opinion on the IPO is NEUTRAL.

Expected IPO Pricing Date: August 18, 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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