Earlier this morning, Alector (ALEC), a biopharmaceutical
focused on immuno-neurology, priced its 9.25 mln share IPO at $19, the
mid-point of the $18-$20 expected price range. It becomes just the second IPO
to price this year, following up on New Fortress Energy's (NFE) IPO last week.
As we have discussed in prior comments, the government shutdown put a lock on the IPO market, as the staffing limitations it imposed kept the SEC from having personnel available to review IPO filing documents and financial statements. But with the government re-opening -- at least for the moment -- a window has opened for some deals to price. Whether that window stays open a couple of weeks from now remains to be seen.
As it currently stands, two more deals are expected to price tomorrow (Gossamer Bio & Harpoon Therapeutics), and another four are on the docket for next week, signaling that action is expected to pick up, at least for the time being. Once this shutdown is finally in the rearview mirror, we would expect activity to really ramp up due to the strong markets, a building pipeline of IPOs, and pent-up investor demand for new issues.
ALEC's deal is set to generate $175.75 mln in total gross proceeds. The lead underwriters on the deal were Morgan Stanley, BofA Merrill Lynch, Barclays, and Cowen. The stock is set to open for trading this morning on the Nasdaq.
ALEC is a clinical stage biopharmaceutical company focused on immuno-neurology, a novel therapeutic approach for the treatment of neurodegeneration. Immuno-neurology targets immune dysfunction as a root cause of multiple pathologies that drive degenerative brain disorders.
The company is developing therapies that are designed to counteract these pathologies by restoring healthy immune function to the brain. Its Discovery Platform leverages large scale human genetic datasets, advanced tools in bioinformatics and imaging, and insights into neurodegeneration and immunology to identify immune system targets that play a critical role in the development of multiple neurodegenerative diseases.
Over the past five years, ALEC has identified over forty immune system targets, progressed over ten programs into preclinical research, and advanced two product candidates, AL001 and AL002, into clinical development. As of January 25 of this year, AL001, aimed initially at treating a genetic subset of patients with frontotemporal dementia (FTD) carrying a progranulin (PGRN) loss of function mutation (FTD-GRN), had been dosed in 44 healthy subjects in a single ascending dose Phase 1 study.
- AL001: There were no drug-related serious adverse events or dose limiting adverse events reported in the above-mentioned study, achieving the primary endpoint. Statistically significant increases in plasma and cerebrospinal fluid PGRN levels relative to baseline were also observed, successfully demonstrating proof-of-mechanism for AL001 in the central nervous systems of healthy volunteers. The company plans to advance AL001 into a Phase 1b study with proof-of-mechanism data in FTD-GRN patients expected in 1H19 and into a Phase 2 study with proof-of-concept data in FTD-GRN patients expected in 1H20.
- AL002 and AL003: In 2H18, it also initiated a dose escalation Phase 1 study in healthy volunteers with AL002, a product candidate for Alzheimer’s disease. In 2H18, the company advanced AL002 into clinical studies initiating a dose escalation Phase 1 study in healthy volunteers. It also plans to advance AL003 into clinical studies for the treatment of Alzheimer’s disease in 1H19.
For the nine months ended September 30, 2018, ALEC generated revenue of $18.5 mln compared to $700K in the year ago period. The increase of $17.9 mln was primarily due to collaboration revenue recognized from the upfront payments under the AbbVie Agreement (ABBV), a partnership for global clinical development and potential commercialization for medicines that treat Alzheimer’s and other neurogenerative diseases that was entered into in 4Q17.
Still, the company's operating loss widened to ($38.3) mln from ($22.9) mln in the year ago period. This was due to a $29.9 mln increase in R&D expense, driven by an increase in expenses for four product candidates that it is preparing for or that have entered into Phase 1 clinical trials and by related increases in activities for the manufacturing of clinical materials.