IPO Preview: Sun BioPharma Starts $12 Million IPO Process

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Sun BioPharma (SNBP) aims to raise $12 million in an IPO of its common stock, according to an S-1 registration statement.

The firm is a clinical stage biopharma advancing a small molecule treatment candidate for pancreatic cancer and other solid tumors.

SNBP is a tiny firm with little capital trying to find a more effective treatment for a very difficult area of cancer research.

I’ll provide an update when we learn more about the IPO.

Waconia, Minnesota-based Sun was founded to develop a single polyamine metabolic inhibitor for patients with pancreatic cancer.

Management is headed by co-founder, president, Executive Chairman and CEO Michael Cullen M.D., M.B.A., who has been with the firm since and was previously Chief Medical Officer of MGI Pharma.

Below is a brief overview video of pancreatic cancer:

Source: Osmosis

The firm's candidate, SBP-101, a first-line therapy for metastatic pancreatic ductal adenocarcinoma, is being tested in combination with gemcitabine and nabpaclistaxel.

Management reported positive tolerability results along with a 62% objective response rate, 'which is more than double contemporary response rates for Gem + Nab along.'

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

sunbiostatus

Source: Company Website

Investors in the firm have invested at least $42 million to-date.

According to a 2017 market research report by Grand View Research, the global market for pancreatic cancer treatments is expected to reach a value of $4.2 billion by 2025.

Key elements driving this expected growth are a growing population aged 65 to 75 years, the peak period of incidence for pancreatic cancer, as well as growing tobacco consumption along with smoking higher obesity rates and growing awareness of treatment options.

Also, pancreatic cancer will likely become the second most common cause of cancer deaths in the U.S. by 2030.

The North America region produced the largest revenue share by region in 2015.

Major competitive vendors that provide or are developing treatments include:

  • Eli Lilly & Co. (LLY)
  • Celgene (CELG)
  • F. Hoffmann-La Roche
  • Amgen (AMGN)
  • Novartis (NVS)
  • PharmaCyte Biotech (PMCB)
  • Clovis Oncology (CLVS)
  • Teva Pharmaceutical (TEVA)
  • Merck (MRK)
  • Pfizer (PFE)

Sun’s recent financial results show no revenue and R&D and G&A expenses associated with its development efforts.

Below are the company’s financial results for Q1 2020 and 2019:

sunbiopl

Source: Company registration statement

As of March 31, 2020, the company had $1.3 million in cash and $1.4 million in total liabilities. (Unaudited, interim)

Sun intends to raise $12 million in gross proceeds from an IPO of its common stock, although the final amount may be different.

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.

The firm’s stock is traded intermittently on the OTCQB market under the ticker symbol SNBP and the most recent trade was at $6.00 On July 1, 2020, although this doesn’t really mean anything substantive related to the IPO.

Management says it will use the net proceeds from the IPO ‘for the continued clinical development of our initial product candidate SBP-101; for the repayment of approximately $0.8 million of principal and accrued interest due on outstanding indebtedness and the remainder for working capital, business development and other general corporate purposes.’

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

The sole listed bookrunner of the IPO is Craig-Hallum Capital Group.

Commentary

Sun is seeking public market funding to advance its sole drug within and beyond Phase 1 trials.

The firm’s candidate is being developed to treat pancreatic cancer, one of the most difficult treatment areas in oncology, so a tiny firm looking to succeed where major pharmas have failed is a bit of a ‘David and Goliath’ narrative.

The market opportunity for pancreatic cancer treatments is significant and the unmet needs are large, given the extremely low five-year survival rate for patients.

The firm has no signed collaboration agreements with major pharma firms; rather it is seeking to test its candidate in conjunction with existing treatment options.

I could not determine if there are any well-known venture capital firm investors in the company, as the S-1 filing did not list any investors.

Craig-Hallum Capital Group is the sole listed underwriter and there is no data on the firm’s IPO involvement over the last 12-month period.

Sun is a tiny biopharma with little in the way of capital seeking to find a treatment for a terribly difficult area of cancer research, so the IPO has long odds in my view.

I’ll provide a final opinion when we learn more about the IPO.

Expected IPO Pricing Date: To be announced.

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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