IPO Launch: Taysha Gene Therapies Proposes $125 Million IPO
Taysha Gene Therapies (TSHA) intends to raise $125 million in an IPO of its common stock, according to an S-1 registration statement.
The company is developing genetic therapy treatments for various neurodegenerative diseases and other disorders.
TSHA is still at a preclinical stage and the IPO is priced above the typical range for clinical stage biopharma IPOs, so may be more suited to long-term hold institutional investors.
Dallas, Texas-based Taysha was founded to advance its pipeline of various gene AAV (adeno-associated virus delivered) therapy candidates for neurodegenerative diseases, neurological disorders and genetic epilepsies.
Management is headed by president and Chief Executive Officer Mr. RA Session II, who has been with the firm since the firm's founding and was previously Chief Business Officer of the gene therapy subsidiaries of BridgeBio Pharma (BBIO).
Below is a brief overview video of Tay-Sachs Disease:
The firm's lead candidate is TSHA-101 and is being developed for the treatment of GM2 gangliosidosis, or Tay-Sachs disease.
Management expects to begin Phase 1 trials in Canada by the end of 2020. The company also expects to submit INDs for four programs to the US FDA by the end of 2021.
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 $18 million and include PBM Capital Group, UT Southwestern and FMR LLC (Fidelity Management).
According to a 2020 market research report by Data Bridge Market Research, the market for GM2 ganglioside diseases, of which Tay-Sachs is one form, is approximately one incidence for every 320,000 live births.
This represents a forecast CAGR (Compound Annual Growth Rate) of So, the disease is a rare disease. However, it is growing due to family history being an indicator of potential heritability.
Key elements driving this expected growth are the emergence of new drugs to treat complications from the disease group.
However, the market suffers from restraints due to 'limited operating revenue opportunities for research and development of targeted therapies...and low healthcare budgets in developing countries.
Major competitive vendors that provide or are developing treatments include:
- Axovant Sciences (AXGT)
- Amicus (FOLD)
- Recursion Pharmaceuticals
- Johnson & Johnson (JNJ)
- Pfizer (PFE)
- Eli Lilly & Company (LLY)
- Bristol-Myers Squibb (BMY)
- AstraZeneca (AZN)
- Novartis (NVS)
Taysha’s recent financial results are typical of a development stage biopharma in that they feature no revenue and material R&D and G&A expenses associated with its development activities.
Below are the company’s financial results since September 20, 2019:
Source: Company registration statement
As of June 30, 2020, the company had $11.2 million in cash and $20.1 million in total liabilities. (Unaudited, interim)
Taysha intends to raise $125 million in gross proceeds from an IPO of its common stock, selling 6.6 million shares at a proposed midpoint price of $19.00 per share.
No existing shareholders have indicated an interest to purchase shares at the IPO price, a common feature of life science IPOs.
Assuming a successful IPO, the company’s enterprise value at IPO would approximate $662.7 million, excluding the effects of underwriter over-allotment options.
Management says it will use the net proceeds from the IPO to advance its monogenic gene therapy pipeline and for general corporate purposes.
The firm’s presentation of the company roadshow is available here.
Listed bookrunners of the IPO are Goldman Sachs, Morgan Stanley, Jefferies, and Chardan.
Taysha is seeking public capital market investment to advance its large gene therapy pipeline through trials.
The firm’s lead candidate hasn’t entered Phase 1 safety trials yet and its first four programs won’t likely enter trials in the U.S. until 2022.
The market opportunities for the monogenic treatment of various rare diseases are significant but difficult to quantify for such a large cohort of treatment programs.
The firm has disclosed no research or commercial collaborations with major pharma firms, so is pursuing a go-it-alone approach at this time.
The company’s investor syndicate includes Fidelity Management Research, but no notable life science venture capital firms.
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 70.0% since their IPO. This is a top-tier performance for all major underwriters during the period.
As to valuation, management is asking IPO investors to pay an enterprise value of $662 million, well above the typical range for even a clinical stage firm, much less a still preclinical firm such as Taysha.
Given the company’s preclinical stage of development and high valuation, the IPO appears to be more suited to long-term hold institutional firms.
My opinion is to AVOID it.
Expected IPO Pricing Date: September 23, 2020.
(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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