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Kinnate Biopharma Commences $100 Million IPO

Kinnate Biopharma (KNTE) intends to raise $100 million in an IPO of its common stock, according to an S-1 registration statement.

San Diego, California-based Kinnate was founded to create its Kinnate Discovery Engine and focus its efforts on three patient populations with the following cancer characteristics:

1. Cancers contain known oncogenic drivers – gene mutations

2. Cancers with ‘genomically well-characterized tumors that have intrinsic resistance to currently available treatments.

3. Cancers that have acquired resistance over the course of existing treatment therapy attempts.

Management is headed by president and CEO Mr. Nima Farzan, who has been with the firm since March 2020 and was previously an advisor to Emergent BioSolutions and MODA Pharmaceuticals.

Below is a brief overview video of kinase inhibitors and immunomodulatory drugs:

Source: ImedexCME

The firm’s lead candidate is KIN002787, which is a Rapidly Accelerated Fibrosarcoma [RAF] inhibitor for patients with lung cancer, melanoma and other solid tumors.

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

kinnatepipe

Source: Company S-1 Filing

Investors in the firm have invested at least $190 million and include Foresite Capital, OrbiMed, RA Capital and Nextech Oncology.

According to a 2019 market research report by Transparency Market Research, the global market for kinase inhibitors was $46.4 billion in 2018 and is expected to reach $63.5 billion by 2027.

This represents a forecast CAGR (Compound Annual Growth Rate) of around 4% from 2019 to 2027.

Key elements driving this expected growth are a rise in awareness about new drug developments, further innovation by new and existing firms.

Also, while North America has accounted for the highest market share, the Asia Pacific region is expected to grow at the highest CAGR through 2027.

Below is a summary graphic on the market’s characteristics:

kinnatemkt

Major competitive vendors that provide or are developing related treatments include:

  • Novartis (NVS)
  • Roche (RHHBY)
  • Janssen Biotech (JNJ)
  • Incyte Corporation (INCY)
  • Taiho Oncology
  • QED Therapeutics
  • Relay Therapeutics (RLAY)

Kinnate’s recent financial results are typical of a preclinical stage biopharma in that they feature no revenue and significant G&A and R&D costs associated with its discovery and development efforts.

Below are the company’s financial results for the past two and ¾ years (Audited PCAOB for full years):

kinnatepl

Source: Company registration statement

As of September 30, 2020, the company had $156.9 million in cash and $6.7 million in total liabilities. (Unaudited, interim)

Kinnate intends to raise $100 million in gross proceeds from an IPO of its common stock, although the final amount may differ.

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.

Management says it will use the net proceeds from the IPO as follows:

to fund the continued development of our most advanced product candidate, KIN002787;

to fund the continued development of product candidates in our FGFR program; and

the remaining amounts, if any, to fund the continued development of our other research programs, as well as for working capital and other general corporate purposes.

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

Listed bookrunners of the IPO are Goldman Sachs, SVB Leerink, Piper Sandler and Wedbush PacGrow.

Commentary

Kinnate is seeking funding for its focused pipeline of kinase inhibitor drug candidates.

The firm’s lead candidate, KIN002787, being developed for the treatment of various prevalent treatment resistant cancers, is still in preclinical stage, though management expects to enter Phase 1 safety trials some time in 2021, likely the latter part of the year.

The market opportunities for the firm’s treatment programs are quite large, as the solid tumor segment is extremely large and comprises numerous sub categories.

The firm hasn’t disclosed any major pharma collaborations, which is not surprising at this early stage of development.

The company’s investor syndicate includes well-regarded venture capital firms with extensive experience investing in biopharma 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 75.0% since their IPO. This is a top-tier performance for all major underwriters during the period.

Management has noted very strong inhibition rates in preclinical studies for its lead candidate, so its approach has significant promise.

Since the company is still at a preclinical stage of development, the IPO is likely more suited to long-term hold institutional investors.

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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