Vaxcyte (PCVX) has filed to raise $100 million in an IPO of its common shares, according to an S-1 registration statement.

The firm is developing a pipeline of pneumococcal (pneumonia, bacteremia and meningitis) vaccine targets.

PCVX is still at the ultra early preclinical stage for all of its programs, so the IPO is likely more relevant for long-term institutional investors rather than individual investors.

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

Foster City, California-based Vaxcyte was founded to utilize its cell-free protein synthesis platform to design and produce protein carriers and antigens to target the multi billion dollar global pneumococcal vaccine market.

Management is led by president and CEO Grant Pickering, who has been with the firm since November 2013 and was previously CEO at Mymetics Corp. and an EIR at venture capital firm Kleiner Perkins Caulfield and Byers.

Below is a brief overview video of pneumococcal vaccine benefits:

Source: St. Elizabeth Healthcare

The firm's lead candidate, VAX-24, is being developed for invasive pneumococcal disease and Otitis Media.

Vaxcyte acquired the exclusive rights to Sutro Biopharma’s cell-free protein synthesis platform and is using the platform as the basis for its vaccine development efforts.

Management expects to file an IND in 2H 2021 and to publish Phase 1/2 topline data in 2022.

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

vaxcytepipe

Source: Company S-1 Filing

Investors in the firm have invested at least $270 million and include Abingworth Bioventures, Longitude Venture Partners, Roche Financial, TPG Growth, Frazier Life Sciences, Pivotal bioVenture Partners, Sutro Biopharma (STRO), Medicxi, Janus Henderson and RA Capital Management.

According to a 2019 market research report by ResearchAndMarkets, the market for pneumococcal vaccines was $8 billion in 2018 and is expected to reach $10.6 billion in 2024.

This represents a forecast CAGR (Compound Annual Growth Rate) of 4.74% from 2019 to 2024.

Key elements driving this expected growth are continued support from local governments and non-governmental health organizations due to an increase in the number of pneumococcal diseases.

Major competitive vendors that provide or are developing treatments include:

  • Pfizer (PFE)
  • Sanofi Pasteur MSD (SNY)
  • GSK (GSK)
  • Merck (MRK)
  • AstraZeneca (AZN)
  • Baxter International (BAX)

Vaxcyte’s recent financial results are typical of an early stage biopharma in that they feature no revenue and significant R&D and G&A expenses associated with its pipeline development activities.

Below are the company’s financial results for the past two and ¼ years (Audited PCAOB for full years):

vaxcytepl

Source: Company registration statement

As of March 31, 2020, the company had $154.8 million in cash and $25.3 million in total liabilities. (Unaudited, interim)

Vaxcyte intends to raise $100 million in gross proceeds from an IPO of its common shares, although the final amount may be different.

Management says it will use the net proceeds from the IPO to fund development of VAX-24, including manufacturing scale-up activities, to fund the ongoing development of its other vaccine candidates and the remainder for general corporate purposes, as well as potential expansion of our research pipeline.

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

Listed bookrunners of the IPO are BofA Securities, Jefferies, Evercore ISI, Cantor, and Needham & Company.

Commentary

Vaxcyte is seeking a more or less typical biopharma IPO transaction amount from public investors.

The firm’s lead candidate is still in preclinical development, as are its other programs, so Vaxcyte is an extremely early stage firm with a long wait until Phase 1 trials begin.

The market opportunity for its lead program is large and expected to grow materially in the years ahead. Other programs appear to have moderate to large market size opportunities.

Management has disclosed no commercial or development collaborations, other than its licensing arrangement for the protein synthesis platform from Sutro Biopharma.

BofA Securities is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 33.1% since their IPO. This is a top-tier performance for all major underwriters during the period.

Vaxcyte is such an early stage firm that the IPO is really a venture stage investment round and is likely more suited to institutional investors with very long-term hold time frames.

I’ll provide a final opinion when we learn more about the IPO’s pricing and valuation assumptions.

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. Information provided is for educational purposes only, may be incomplete or out of date, and does not constitute financial, legal, or investment advice.)