Biopharmaceutical company Chiasma has updated the terms of its Nasdaq IPO with the US Securities and Exchange Commission (SEC). The company, which recently submitted a request for marketing approval of its drug for treatment of acromegaly, a diseas stemming from excessive hormone growth, will raise $80 million, and up to $92 million if the underwriters options are realized. Barclays Capital and Cowen & Co. are leading the offering with William Blair and Oppenheimer as the secondary underwriters.
Company value is a little lower than market expectations following Chiasma's initial announcement about the IPO but the amount being raised remains more or less as planned - one of the largest Israeli biotech IPOs to date. The amount raised will enable Chiasma to build an appropriate marketing network if its product is approved in the coming months.
Chiasma's drug is an oral version of an existing drug marketed by Novartis for treatment of the disease. Sales of this drug and similar injectables for treatment of acromegaly total $730 million annually, while sales of all drugs for treatment of the disease total $2 billion. Injection of these drugs is considered very painful, and requires a trip to the hospital.
A clinical trial conducted by Chiasma showed that its drug, administered orally twice a day, prevented side effects like pain and irritation in the area of the injection, and also alleviated the symptoms of the disease, in comparison with the existing treatment. Chiasma is developing a number of additional products based on the same technology, so that drugs that currently require injection or an IV can be taken orally.
Chiasma's IPO is also unique, because Chiasma's leading product has already been given a price tag by Roche. This international company acquired the product in February 2013 before the Phase III trial in exchange for a $65 million advance and future payments of up to $600 million, depending on milestones and the product's success.
Roche's Phase III trial for the product was successful, but the company elected to return it to Chiasma in August 2014 instead of continuing to develop it, while calling the trial a success. Roche paid Chiasma a total of $90 million during the period of the agreement between them.
Assuming that we accept Chiasma's statement that Roche gave up the drug because of internal changes, not because the clinical data were in any way disappointing or the market smaller than expected, the estimate of the project's value by an industry expert , at least as of 2013, can be deduced from this agreement. It should be noted, however, that since the agreement was signed, Novartis has bolstered the competitiveness of its injectable product, which can now be administered once a month, compared with two pills a day of Chiasma's product.
Acromegaly causes accelerated growth of the bones, due to increased emission of growth hormone caused by a benign brain tumor. One prominent patient suffering from this disease was André René Roussimoff ("Andre the Giant"), who acted in a number of films, including "The Princess Bride." Without suitable treatment, most patients die at a fairly
The company almost closed twice but has raised money in recent years under former CEO and today Chief Development Officer Dr. Roni Mamluk.
Published by Globes [online], Israel business news - www.globes-online.com - on July 8, 2015
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