Nurix Therapeutics (NRIX) has filed to raise $150 million from the sale of its common stock in an IPO, according to an amended registration statement.

The company is developing drug candidates to treat various blood cancers.

NRIX has significant collaboration partners and a top tier investor syndicate, but the firm is still at an extremely early stage and the IPO is likely more suited to institutional investors rather than individual investors.

San Francisco, California-based Nurix was founded to create a portfolio of chimeric targeting molecule-based drug candidates that serve to 'degrade the BTK protein' as well as a ligase inhibitor that 'inhibits CBL-B ligase to raise substrate protein levels.'

Management is led by president and Chief Executive Officer Mr. Arthur T. Sands, M.D., Ph.D, who has been with the firm since 2014 and was previously founder of Lexicon Pharmaceuticals (LXRX).

Below is a brief overview video of non-Hodgkin Lymphoma:

Source: Osmosis

The firm's lead candidate is NX-2127, a BTK degrader molecule that aims to treat non-Hodgkin lymphoma and chronic lymphocytic leukemia.

In preclinical studies, Nurix has shown the ability of the drug to 'degrade BTK in both wild type tumor cell lines and those that have the C481S mutation that confers resistance to currently marketed BTK inhibitors.'

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

nurixpipe

Source: Company S-1 Filing

Investors in the firm have invested at least $170 million and include The Column Group, Third Rock Ventures, Foresite Capital and Bristol-Myers Squibb (BMY).

According to a 2019 market research report by Grand View Research, the global market for lymphoma treatment was an estimated $11.7 billion in 2018.

The report indicates a forecast CAGR (Compound Annual Growth Rate) of 9.5% from 2019 to 2026.

If that growth rate is achieved, the total global market size would exceed $24 billion at the end of the analysis period.

Key elements driving this expected growth are an expected increase in application of premium-priced immune checkpoint inhibitor products, such as Keytruda and Opdivo and an increase in the number of lymphoma and Hodgkin and non-hodgkin lymphoma cases.

Also, the U.S. lymphoma market's historical and projected future growth prospects are shown in the chart below:

Major competitive vendors that provide or are developing treatments include:

  • Arvinas (ARVN)
  • C4 Therapeutics
  • Cullgen
  • Kymera Therapeutics
  • Also, major pharma firm are making many investments in the field
  • Merck (MRK)

Nurix’s recent financial results are atypical of life science biopharma companies at IPO in the sense that the firm has recognized significant collaboration revenue along with its substantial R&D and G&A expenses associated with its development efforts.

Below are the company’s financial results for the past two and ½ years (Audited PCAOB for full years):

nurixpl

Source: Company registration statement

As of May 31, 2020, the company had $182.6 million in cash and $106.7 million in total liabilities. (Unaudited, interim)

NRIX intends to sell 8.8 million shares of common stock at a midpoint price of $17.00 per share for gross proceeds of approximately $150 million, not including the sale of customary underwriter options.

No existing shareholders have indicated an interest to purchase shares at the IPO price, a typical 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 $417.1 million.

Excluding effects of underwriter options and private placement shares or restricted stock, if any, the float to outstanding shares ratio will be approximately 25.33%.

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

to fund the development of NX-2127

to fund the development of NX-1607

to fund the development of other preclinical programs; and

any remaining amounts to conduct research, fund the further development of our technology platform, broaden our pipeline of product candidates and for working capital and general corporate purposes.

Management’s presentation of the company roadshow is available here.

Listed underwriters of the IPO are J.P. Morgan, Piper Sandler, Stifel and Needham & Company.

Commentary

NRIX is seeking a larger-than-average IPO transaction size to advance its trial programs through development.

For its lead candidate, The firm plans to file an IND in Q1 2021, so NRIX is still at a very early stage of development.

The market opportunity for developing treatments for various types of lymphoma is reasonably large and expected to grow at a substantial rate over the coming years, as the US population ages and there is an increasing rate of incidence of the disease owing to reduced immune system capabilities in older persons.

Management has created research collaborations with both Sanofi (SNY) and Gilead (GILD) and the firm has received investment from Bristol-Myers Squibb.

Additionally, NRIX is a portfolio company of Third Rock Ventures, a prominent and successful biotech venture capital firm focused on the life science industry.

J.P. Morgan is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 80.7% since their IPO. This is a top-tier performance for all major underwriters during the period.

As to valuation, the firm’s enterprise value is within the typical range for biopharma IPOs, so the IPO appears reasonably valued.

NRIX is still at a pre-Phase 1 safety trials stage, so the IPO is more of a venture funding round and is perhaps more suited to institutional investors with a very long-term hold time frame, rather than individual investors.

While the firm has strong collaborations and a noted investor syndicate, the IPO is ultra high risk, so my opinion on it is NEUTRAL.

Expected IPO Pricing Date: July 23, 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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