IPO Launch: Inventiva SA Proposes Terms For $102 Million U.S. IPO

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Inventiva SA (IVA) has filed to raise $102 million in an IPO of ADSs representing underlying ordinary shares, according to an amended registration statement.

The company is developing treatments for NASH (Non Alcoholic Steato Hepatitis), MPS (Mucopolysaccharidosis) and other conditions.

IVA is preparing to enter Phase 3 trials for its lead candidate for NASH, a large and quickly growing market.

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To listen to an audio version of this report, click the Play button on the graphic below:

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Management is led by co-founder, Chairman and CEO Frederic Cren, who was previously General Manager, Research of Abbott Laboratories (ABT) and held roles at Solvay Pharmaceuticals.

Below is a brief overview video of Inventiva's IPO in France (in French):

Source: Boursorama

The firm's lead candidate is Lanifibranor and is in Phase 2 trials for the treatment of NASH.

Management expects to have formal meetings at the end of its Phase 2b trials some time in Q4 2020.

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

inventivapipe

Source: Company F-1 Filing

Investors in the firm have invested at least $100 million and include BVF Partners, Frederic Cren, New Enterprise Associates, Pierre Broqua, Novo Holdings, and Sofinnova.

According to a 2018 market research report by Allied Market Research, the global market for NASH treatments was valued at $1.2 billion in 2017 and is expected to reach $21.5 billion by 2025.

This represents a forecast CAGR (Compound Annual Growth Rate) of 58.4% from 2021 to 2025.

Key elements driving this expected growth are a surge in the incidence of diabetes resulting in greater risk of obtaining NASH as well as sharply increased development of treatment options amid greater awareness of the disease and its potential treatments.

Also, a breakdown of the different drug types used to treat NASH is shown below:

Major competitive vendors that provide or are developing treatments include:

  • Allergan
  • Galmed Pharmaceuticals (GLMD)
  • Madrigal Pharmaceuticals (MDGL)
  • Gilead Sciences (GILD)
  • BioMarin (BMRN)
  • Numerous other companies

Inventiva’s recent financial results are atypical of a development stage biopharma, in that they feature some revenue but are also typical in terms of 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 IFRS for full years):

inventivapl

Source: Company registration statement

As of March 31, 2020, the company had $52.6 million in cash and $17.7 million in total liabilities. (Unaudited, interim)

IVA intends to sell 7.5 million ADSs representing ordinary shares at an expected price of $13.68 and the firm also will conduct a European offering concurrent with the IPO.

Total gross proceeds from the U.S. IPO will be approximately $102.3 million, not including the sale of customary underwriter options.

Assuming a successful IPO at the midpoint of the proposed price range, the company’s enterprise value at IPO for its U.S. capitalization would approximate $522 million.

Excluding effects of underwriter options and private placement shares or restricted stock, if any, the float to outstanding shares ratio will be approximately 19.59%, subject to reallocation and the extent of the European offering.

Per the firm’s most recent regulatory filing, it plans to use the net proceeds ‘to complete preparations for and initiate a Phase III clinical trial of lanifibranor for the treatment of patients with NASH; to complete our planned Phase Ib/II clinical trial of odiparcil in a pediatric population with MPS VI, initiate our planned label Phase IIa extension study of odiparcil in patients 16 years and above with MPS VI and initiate Phase III clinical development of odiparcil as a monotherapy and in combination with ERT for the treatment of adult and pediatric patients with MPS VI; to advance development of our Hippo pathway signaling program and other pre-clinical programs; and the balance for working capital and general corporate purposes.’

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

Listed underwriters of the IPO are Jefferies, Stifel, Guggenheim Securities, H.C. Wainwright & Co., Roth Capital Partners and KBC Securities.

Commentary

IVA is seeking U.S. and European funding for its NASH and MPS clinical trials.

For its lead candidate, the firm has achieved impressive results in its Phase 2b trials, where ‘lanifibranor at a dose of 1,200 mg met the primary endpoint of a reduction in inflammation and ballooning with worsening of fibrosis after 24 weeks of treatment, while continuing to show the favorable tolerability profile observed in prior clinical trials…’

By the end of 2020, management expects to have further meetings about its Phase 3 trial endpoints and investors probably won’t hear about Phase 3 initial data until well in 2022.

The market opportunity for the treatment of NASH is large and expected to grow at a stunning rate over the coming years, so the firm has strong demand dynamics in its favor.

However, IVA has disclosed no research or commercial collaborations and the company faces numerous well-funded competitors developing treatments for NASH, including major pharma firms worldwide.

Jefferies is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 133.6% since their IPO. This is a top-tier performance for all major underwriters during the period.

As to valuation, the IPO appears at the high end of the typical range for biopharma firms, although given IVA’s current status and its trial results to-date, the IPO is reasonably valued.

For life science investors with an 18 to 24-month hold time frame, my opinion on the IPO is a BUY at or around $13.68 per ADS.

Expected IPO Pricing Date: July 9, 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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