IPO Preview: Shattuck Labs Pursues $100 Million U.S. IPO
Shattuck Labs (STTK) intends to raise $100 million in an IPO of its common stock, according to an S-1 registration statement.
Austin, Texas-based Shattuck was founded to develop drugs that simultaneously inhibit checkpoints in various cancers while bolstering the body's immune response and ability to act against tumors.
Management is headed by co-founder and CEO Taylor Schreiber, M.D., Ph.D, who was previously Vice President of R&D and Chief Scientific Officer at Heat Biologics.
Below is a brief overview video of the warning signs of ovarian cancer:
Source: Roswell Park Comprehensive Cancer Center
The firm's lead candidate, SL-172154, is currently in Phase 1 safety trials with ovarian cancer patients and management expects to enter the dose escalation phase of the trial in the second half of 2021.
Its second candidate, SL-279252, is being developed with Takeda Pharmaceuticals for the treatment of advanced solid tumors and lymphoma.
Below is the current status of the company’s drug development pipeline:
Source: Company S-1 Filing
Investors in the firm have invested at least $166 million and include Fidelity, G. Walter Loewenbaum, Redmile Group, Daniel Traylor, Millennium Pharmaceuticals, Clark BP, Hatteras Venture Partners, EcoR1 Capital, Janus Henderson and Delphinium.
According to a 2019 market research report by GlobalData, the market size for ovarian cancer treatment in the seven major markets was an estimated $1.8 billion in 2018 and is expected to reach $6.7 billion by 2028.
This represents a forecast CAGR (Compound Annual Growth Rate) of a very high 14.4% from 2019 to 2028.
Key elements driving this expected growth are the adoption of maintenance therapies, the launch of new pipeline agents and increased screening activities for genetic markers of the disease.
Also, in 2028, 'three PARP inhibitor drugs are expected to have combined revenue of $2.8 billion, constituting more than 40% of the global ovarian cancer market. Moreover, by 2028, another major revenue contributor will be new drug classes – notably, immune checkpoint inhibitors, with five expected to enter the market bringing combined forecasted revenues of around $1.4bn.'
Major competitive vendors that provide or are developing/funding treatments include:
- AstraZeneca (AZN)
- Bristol Myers Squibb (BMY)
- Merck (MRK)
- Novartis (NVS)
- Pfizer (PFE)
- Roche (RHHBY)
Shattuck’s recent financial results are atypical of an early stage biopharma in that they feature significant collaboration revenue from its partnership with Takeda Pharmaceuticals.
Below are the company’s financial results for the past two and ½ years (Audited PCAOB for full years):
Source: Company registration statement
As of June 30, 2020, the company had $147.5 million in cash and short-term investments and $36.5 million in total liabilities. (Unaudited, interim)
Shattuck intends to raise $100 million in gross proceeds from an IPO of its common stock, although the final figure may differ.
No existing shareholders have indicated an interest to purchase shares at the IPO price, although this element may become a feature of the IPO if disclosed in a future filing.
Management says it will use the net proceeds from the IPO as follows:
to advance SL-172154 through the completion of our ongoing and planned Phase 1 clinical trials and to commence a Phase 2 clinical program;
to advance SL-279252 through the completion of our ongoing Phase 1 clinical trial; and
to develop and advance additional product candidates derived from our platforms through IND-enabling studies and to commence Phase 1 clinical trials.
the remainder of the net proceeds for working capital and general corporate purposes.
Management’s presentation of the company roadshow isn’t available.
Listed bookrunners of the IPO are Citigroup, Cowen, Evercore ISI and Needham & Co.
Shattuck is seeking funding to advance its pipeline of checkpoint inhibitors as treatments for various widely prevalent cancers.
The firm’s drug candidates are all in various stages of Phase 1 trials and are preparing for the dose escalation portion of the trials to determine if higher doses cause any safety problems.
The market opportunities for the firm’s various programs are extremely large, with the solid tumor market being the world’s largest and expected to grow substantially in the years ahead and the global population ages.
The company has received significant collaboration revenue from its relationship with Takeda Pharmaceuticals, a strong validation point for the firm.
Citigroup is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of negative (8.6%) since their IPO. This is a bottom-tier performance for all major underwriters during the period.
Shattuck has shown its drugs are well tolerated, at least to-date, and preclinical studies have shown ‘superior tumor rejection as compared to CD47 and CD40 antibodies, a durable receptor occupancy, a dose-dependent lymphocyte migration into lymphoid tissues and no occurrence of anemia.’
When we learn more about the IPO, I’ll provide a final opinion.
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. 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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