Before the open today, Orchard Therapeutics' (ORTX 13.40, -0.60, -4.29%) priced its up-sized 14.29 mln
share IPO at $14, the low end of the $14-$16 expected price range. With the
company originally expecting to sell 13.33 mln shares, however, the IPO is actually
set to generate slightly more in proceeds than was first anticipated.
Specifically, it raises $200.6 mln in gross proceeds versus the original
expectation of $199.5 mln.
In the current tumultuous climate for IPOs, we would certainly consider that to be a win for ORTX. Prior to this recent down-turn for the IPO market, healthcare-related IPOs had been in vogue -- and for quite some time.
The solid demand for ORTX doesn't necessarily mean that we are back to those high-flying days, but, it is an encouraging development. Especially when considering that Axonics Modulation Therapies (AXNX) -- another healthcare IPO -- also saw strong demand today as its IPO was up-sized and priced at the mid-point of its expected price range.
But there are also company-specific reasons why investors may have been drawn to ORTX's IPO. For instance, the company already has a commercially-available product called Strimveli that is approved in the European Union, although to-date, only a limited number of patients have been treated with Strimveli.
The company also has full commercial rights to its primary product candidates and is building out commercial infrastructure to deliver its products around the world. So, if its products become commercially successful, ORTX will reap the full rewards.
Furthermore, with regards to the IPO, it has blue chip investment banks behind it in Goldman Sachs and JP Morgan, along with Cowen and Wedbush, providing the IPO with even more credibility.
ORTX is a commercial-stage biopharmaceutical company focused on treating patients with serious and life-threatening rare diseases though autologous ex vivo gene therapies. Autologous means "obtained from the same individual", and ex vivo refers to a medical procedure in which an organ, cells, or tissue are taken from the body for a treatment or procedure.
The company is initially focused on three therapeutic rare disease franchise areas: 1) Primary immune deficiencies; 2) Neurometabolic disorders; and 3) Hemaglobinopathies. The indications it is initially targeting in primary immune deficiencies and neurometabolic franchises (ADA-SCID, MLD, WAS, X-CGD, and MPS-IIIA) alone have a combined annual incidence rate of between 1,000 and 2,000 patients in markets around the world where treatments for rare diseases are often reimbursed. Based on this, ORTX believes the total addressable market potential in the disease areas underlying its five lead programs could be greater than $2 bln annually. In addition, certain indications such as X-CGD and WAS have large existing populations with pre-existing disease that could be eligible for its treatments upon receiving marketing approval, which could increase the size of its market opportunity further.
ORTX's portfolio currently includes Strimvelis, its commercial-stage gammaretroviral-based product for the treatment of adenosine deaminase-severe combined immunodeficiency, or ADA-SCID; five lentiviral product candidates in clinical-stage development; and several other product candidates in pre-clinical development. It also anticipates making near-term regulatory submissions for the approval of three of its most advanced clinical-stage product candidates.
Strimvelis is the company's only product that has been approved for sale and, to date, it has only been approved in the European Union for the treatment of ADA-SCID. Furthermore, as noted above, since receiving marketing authorization, only a limited number of patients have been treated with Strimveli.
Its three lead product development programs include:
- OTL-101: This is ORTX's lead product candidate for ADA-SCID, a rare, life-threatening inherited disease of the immune system. OTL-101 has received orphan drug designation from the FDA and the EMA for treatment of ADA-SCID and Breakthrough Therapy Designation from the FDA. ORTX plans to submit a BLA for OTL-101 with the FDA in 2020, followed by an MAA with the EMA.
- OTL-200: ORTX's product candidate for metachromatic leukodystrophy, or MLD, a rare and rapidly progressing neurometabolic disorder, has received orphan drug designation from the FDA and the EMA for the treatment of MLD. ORTX plans to submit an MAA for OTL-200 with the EMA in 2020, followed by a BLA with the FDA.
- OTL-103: This is the company's product candidate for Wiskott-Aldrich syndrome, or WAS, a rare, life-threatening inherited disease affecting the patient's immune system and platelets. OTL-103 has received orphan drug designation from the FDA and the EMA for the treatment of WAS. The company plans to submit an MAA with the EMA and a BLA with the FDA for OTL-103 in 2021.
ORTX hasn't generated any revenue yet, and it had an
operating loss of ($172.1) mln for the six months ended June 30, 2018. The
company expects to continue to incur significant expenses and increasing
operating losses for the foreseeable future. As of June 30, 2018, the company
had cash and equivalents of $48.8 mln on the balance sheet. Based on its
planned use of the net proceeds from this offering and its existing cash, ORTX
estimates that such funds will be sufficient to fund its operations and capital
expenditure requirements into the second half of 2020.