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Akcea prices low, boosts shares to complete $125M IPO

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By Marie Powers
News Editor

Two years after its formation by Ionis Pharmaceuticals Inc., Akcea Therapeutics Inc. planted its own flag on the public markets, opening Friday as AKCA on Nasdaq. The Cambridge, Mass.-based company raised $125 million in its IPO by offering 15.625 million common shares – up from its expected offering of 9.62 million shares – at $8, below its intended range of $12 to $14. Akcea had some help from partner Novartis AG, which agreed to purchase an additional 6.25 million shares in a concurrent private placement.

Akcea expects to have about 64.2 million common shares outstanding following the offering and private placement and reported that Ionis will own a stake of about 73 percent. Underwriters have a 30-day option to purchase up to approximately 2.3 million additional shares to fill overallotments, which could potentially add $18.75 million to the company’s haul. Cowen and Co. LLC, Stifel Nicolaus & Co. Inc. and Wells Fargo Securities LLC are bookrunners on the deal, expected to close by July 19.

Akcea’s shares opened slightly above the IPO price on their initial trading day and closed at $9.48 for a gain of $1.48, or 18.5 percent.

That performance reflects the industry trend in 2017. Akcea becomes the 20th biopharma IPO on the U.S. markets this year and the first to price in the third quarter, according to Peter Winter, editor of BioWorld Insight. Collectively, the remainder of the newly minted crop of 2017 public biopharmas have gained an average year-to-date return of 12.3 percent, Winter said, encouraging other companies on the IPO runway to launch offerings in the second half of the year. (See related story in this issue.)

Akcea entered the queue with an impressive pedigree and $124.5 million in cash, equivalents and short-term investments. Its therapeutic candidates – volanesorsen, AKCEA-APO(a)-LRx, AKCEA-APOCIII-LRx and AKCEA-ANGPTL3-LRx – are based on antisense technology developed by Ionis, of Carlsbad, Calif. Akcea had funded its operating activities through a $100 million cash contribution from Ionis in 2015 plus substantial in-kind assistance: A Jan. 4, 2016, SEC filing by Akcea disclosed an equity transaction of $543.2 million in “cash and non-cash consideration, including the grant of certain rights and licenses to the issuer” that was completed Dec. 18, 2015. In addition to co-development activities, Akcea contracts with Ionis for general administrative services such as legal, finance and human resources.

Akcea also received $75 million in the first quarter of this year from Novartis, of Basel, Switzerland, in a licensing and commercialization deal with the company and Ionis for AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx, therapies targeting the same-named cardiovascular (CV) risk factors. If both candidates move to market, the combined payout could exceed $1.6 billion. Akcea retained the right to co-commercialize either therapy with its own lipid-specialty sales force and stands to pocket up to $600 million of the development, regulatory and commercial milestone payments. (See BioWorld Today, Feb. 17, 2017.)

Akcea and Ionis are obligated to complete phase II development of the two candidates before Novartis decides whether to exercise its option to complete and fund phase III programs. The companies have moved the APO(a) candidate into a phase IIb study in CV disease and hyperlipoproteinemia that is expected to recruit approximately 270 patients and report data late next year, according to Cortellis Clinical Trials Intelligence. Akcea and Ionis also are running a phase I/II safety, tolerability, pharmacokinetics and pharmacodynamics study of the apo-CIII candidate that plans to recruit approximately 56 healthy volunteers with elevated triglycerides, according to Cortellis. Data from that study are due to report in the fourth quarter.

As part of the CV deal, Novartis took a $100 million equity investment in Ionis and agreed to a $50 million stake within 18 months in either Ionis or Akcea. That provision forced Akcea’s hand in designing the IPO terms, as Novartis had the option to invest less than $50 million in the private placement if gross proceeds from the IPO fell below $116.7 million and nothing at all if gross proceeds fell below $100 million, according to Akcea’s S-1 filing.

Akcea also drew down $106 million during the first and second quarters of 2017 from a $150 million line of credit with Ionis established in January. The outstanding principal and accrued interest under the line of credit are set to convert into common shares at the IPO price. The line of credit terminates with completion of the IPO, which, combined with cash on hand, is expected to give Akcea a runway of at least 12 months.

‘Already underway to build out our commercial organization’

Akcea was already looking toward the commercial market in 2016 when it reported its first phase III success with its most advanced program, volanesorsen (previously ISIS-APOCIII-Rx, ISIS-304801 and IONIS-APOCIII-Rx), designed to treat patients with familial chylomicronemia syndrome (FCS) or familial partial lipodystrophy – both orphan lipid disorders characterized by extremely high triglycerides and apo-CIII.

COMPASS met its primary endpoint, showing that patients who received the drug (n=75) achieved a statistically significant (p<0.0001) mean reduction in triglycerides of 71.2 percent from baseline following 13 weeks of treatment compared with a mean reduction of 0.9 percent in those who received placebo (n=38). Although the randomized, double-blind, placebo-controlled study was designed primarily as a supportive trial in the drug’s development program, use of volanesorsen prompted a mean absolute reduction in triglycerides of 869 mg/dl in treated patients, with treatment effect sustained through the end of the 26-week treatment period. The 113 participants entering the study had an average incoming triglyceride level of 1,261 mg/dl, according to Akcea. (See BioWorld Today, Dec. 20, 2016.)

Despite an overall dropout rate of 20 percent, no FCS patients discontinued from the COMPASS study, and no deaths or serious platelet events occurred.

“The fact that we didn’t have any discontinuations in FCS is important for this particular drug going forward in rare diseases,” Paula Soteropoulos, Akcea’s president and CEO, told BioWorld at the time. “What we saw in the broader population was something that we expected because this is a patient population that is primarily asymptomatic. The types of dropouts that we saw are not far beyond what we’ve seen in other types of injection therapies.”

In March, Akcea and Ionis reported similarly sound findings from the pivotal APPROACH study of volanesorsen in individuals with FCS. The randomized, double-blind, placebo-controlled, 52-week phase III study enrolled 66 patients with FCS with an average incoming triglyceride level of 2,209 mg/dL. The study met its primary endpoint, with volanesorsen-treated patients (n=33) achieving a statistically significant (p<0.0001) mean reduction in triglycerides of 77 percent from baseline following three months of treatment compared to a mean increase of 18 percent in placebo-treated patients (n=33). The volanesorsen treatment effect was sustained over the 52-week treatment period.

Moreover, individuals with the highest documented frequency of pancreatitis attacks who were treated with volanesorsen reported no attacks during the 52-week treatment period (p=0.02), and reduction in abdominal pain was seen in individuals on the study drug compared to those who received placebo.

Although a filing timetable was not disclosed, Soteropoulos said after the first phase III that “we’re already underway to build out our commercial organization and conduct pre-commercialization activities to prepare the market to understand this disease.”

Two weeks later, Akcea filed the registration statement for its proposed IPO.

The company plans to commercialize volanesorsen on its own, starting with the U.S., Europe and Canada, followed by other territories. The drug has a consensus five-year sales forecast of $262.8 million, according to Cortellis Competitive Intelligence.

Akcea also has AKCEA-ANGPTL3-LRx, which is in a phase I/II study to treat individuals with elevated triglycerides. Results for the initial cohort from that study, reported at the American Heart Association meeting in November 2016, showed that individuals with elevated triglycerides achieved dose-dependent, statistically significant mean reductions of up to 83 percent in the angiopoietin-like 3, or ANGPTL3, protein. Treatment with AKCEA-ANGPTL3-LRx also was associated with statistically significant mean reductions in triglycerides of up to 66 percent, in LDL-C of up to 35 percent and in total cholesterol of up to 36 percent, and the therapy was well-tolerated.

In the second half of 2017, Akcea plans to initiate a study of AKCEA-ANGPTL3-LRx in patients with hyperlipidemia with metabolic complications, including insulin resistance and fatty liver, that will include individuals with nonalcoholic fatty liver disease, or NAFLD, or nonalcoholic steatohepatitis, or NASH. The company also plans to study the asset in patients with rare hyperlipidemias, including FCS.