Silverback Therapeutics (SBTX) aims to raise $125 million from the sale of its common stock in an IPO, according to an amended registration statement.

Seattle, Washington-based Silverback was founded to create what it calls its ImmunoTAC platform to develop 'systematically delivered, tissue targeted therapeutics' by pairing 'proprietary linker-payloads that modulate key disease-modifying pathways with monoclonal antibodies directed to specific disease sites.'

Management is headed by Chief Executive Officer Ms. Laura Shawver, Ph.D., who has been with the firm since April 2020 and was previously president and CEO of Synthorx until its acquisition by Sanofi in January 2020.

Below is a brief overview video of HER2 Positive breast cancer treatment and research:

Source: Dana-Farber Cancer Institute

The firm's lead candidate, SBT6050, is in Phase 1/1b trials and is being developed to treat solid tumor cancers such as HER2 breast cancer, gastric cancer and non-small cell lung cancer (NSCLC).

Other programs are in preclinical studies for treating bladder cancer, triple negative breast cancer, and head & neck cancer as well as chronic Hepatitis B.

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

silverbackpipe

Source: Company S-1 Filing

Investors in the firm have invested at least $216 million and include OrbiMed, U.S. Venture Partners, Hunt Pacific, Nextech, Pontifax and EcoR1.

According to a 2017 market research report by GlobalData, the global market for Her2+ breast cancer treatments in the eight major markets (7MM plus urban China) was an estimated $6.4 billion in 2015 and was expected to reach $9.9 billion in 2025.

This represents a forecast CAGR (Compound Annual Growth Rate) of 4.4% from 2015 to 2025.

Key elements driving this expected growth are improved technologies and new drug approvals in western countries.

However, for patients with cancer that has metastasized to the brain, existing antibody-based treatments have failed to help because they cannot pass the blood-brain barrier.

Major competitive vendors that provide or are developing related treatments include:

  • AbbView (ABBV)
  • Amgen (AMGN)
  • AstraZeneca (AZN)
  • Bristol-Myers Squibb (BMY)
  • Eli Lilly (LLY)
  • Genentech
  • GlaxoSmithKline (GSK)
  • Johnson & Johnson (JNJ)
  • Merck (MRK)
  • Novartis (NVS)
  • Pfizer (PFE)
  • Roche (RHHBY)
  • Sanofi (SNY)

Silverback’s recent financial results are typical of clinical stage biopharma firms in that they feature no revenue and significant R&D and G&A costs associated with its development activities.

Below are the company’s financial results for the past two and ¾ years (Audited PCAOB for full years):

silverbackpl

Source: Company registration statement

As of September 30, 2020, the company had $142.3 million in cash and $10.6 million in total liabilities. (Unaudited, interim)

SBTX intends to sell 6.95 million shares of common stock at a midpoint price of $18.00 per share for gross proceeds of approximately $125 million, not including the sale of customary underwriter options.

No existing shareholders have indicated an interest to purchase shares at the IPO price, a frequent 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 $371 million.

Excluding effects of underwriter options and private placement shares or restricted stock, if any, the float to outstanding shares ratio will be approximately 24.37%.

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

approximately $50.0 million to fund the development of SBT6050, including the ongoing Phase 1 dose-escalation trial and planned Phase 1b tumor-specific expansion trial of SBT6050 as a monotherapy in HER2-expressing tumors;

approximately $20.0 million to fund the planned Phase 1 dose-escalation trial and planned Phase 1b trial of SBT6050 in combination with a PD-1 inhibitor;

approximately $30.0 million to fund the development of SBT6290, including the ongoing IND-enabling studies and planned Phase 1 dose-escalation trial of SBT6290 in Nectin4-expressing tumors;

approximately $25.0 million to fund the development of ASGR1-TLR8, including the planned IND-enabling studies of our SBT8230 program in cHBV; and

the remaining proceeds to fund our other research and development activities, as well as for working capital and other general corporate purposes.

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

Listed underwriters of the IPO are Goldman Sachs, SVB Leerink, Stifel and H.C. Wainwright & Co.

Commentary

Silverback is seeking public funding for its early stage pipeline of programs to treat various highly prevalent forms of cancer.

For its lead candidate, SBT6050, the company is in Phase 1 trials as a monotherapy and preparing to enter Phase 1 trials for its combination program.

The next data readout is scheduled for the second half of 2021, but for most of its next milestones, investors will need to wait until 2022.

The market opportunities for treating the various cancers the firm seeks to treat are extremely large in the aggregate, as many of them are in the solid tumor mega-market.

Management hasn’t disclosed any collaborations with major pharmas, so is pursuing a go-it-alone approach, at least so far.

The firm’s investor syndicate includes the highly regarded venture capital firm OrbiMed.

Goldman Sachs is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 78.8% since their IPO. This is a top-tier performance for all major underwriters during the period.

As to valuation, management is asking investors to pay an enterprise value of approximately $371 million, within the typical range of a clinical stage biopharma at IPO.

The firm has ‘observed changes in pharmacodynamic markers in the first dose cohort,’ so management believes this is a promising result.

While the IPO is reasonably priced, SBTX is still at a very early stage of development, barely Phase 1 for its lead program.

For life science investors with a very long term hold time frame, the IPO may be worth considering, but I’m NEUTRAL on it.

NEUTRAL

Expected IPO Pricing Date: December 3, 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. Past performance is no guarantee of future results.)

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