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Rhythm, Dermira seek combined $161M raise in IPOs


By Marie Powers
Staff Writer

The fact that U.S. markets were preparing to enter the long Labor Day weekend didn't stop two more biotechs from stepping out with initial public offerings (IPOs). Rhythm Pharmaceuticals Inc., which filed its S-1 as Rhythm Holding Co. LLC prior to its expected conversion from a Delaware limited liability to a Delaware corporation and an official name change, is seeking to raise $86.25 million, including overallotments, to fund the manufacturing and continued development of its drugs targeting gastrointestinal (GI) and metabolic diseases.

Meanwhile, Dermira Inc. set a goal of raising $75 million, including overallotments, to fund continued development of Cimzia (certolizumab pegol) and four additional dermatology candidates. In July, Dermira inked an exclusive licensing deal with UCB SA, of Brussels, for rights to Cimzia in the U.S., Canada and the European Union in return for completing a phase III program of the TNF inhibitor in moderate to severe plaque psoriasis.

Like most of their predecessors during the stunning IPO run that accelerated last year, both biotechs filed as emerging growth companies.

The current IPO window arguably has been open since August 2009, when two companies squeaked through following a drought that saw just a single exit during the previous 19 months. Since that time, 151 biotechs have entered the public markets through IPOs, raising a combined $11.4 billion. (See BioWorld Insight, March 4, 2013.)

With this week's filings, which also included Calithera Biosciences Inc. and Civitas Therapeutics Inc., 34 more are waiting in the IPO queue. With many filings not priced, the additional collective raise could easily exceed $1.6 billion. (See BioWorld Today, Aug. 27, 2014, and Aug. 28, 2014.)

Boston-based Rhythm is focused on peptide therapeutics. The company has maintained that its lead candidate, relamorelin, is superior to first-generation small-molecule ghrelin agonists because it retains the specificity and functionality of the naturally occurring ghrelin peptide and is designed to increase GI motility with improved potency.

The company completed a phase II trial in diabetic gastroparesis and met with regulatory authorities, and expects to begin a phase IIb study in the indication by year-end. With fast track designation from the FDA, relamorelin could advance to a new drug application by 2018, according to Rhythm's filing.

The company also is conducting a phase IIa study of relamorelin to treat chronic refractory constipation in individuals with Parkinson's disease and a phase IIa benchmark trial in patients with chronic constipation.

Rhythm's second clinical program, for RM-493, is complementary to its work in the ghrelin space. The melanocortin 4 receptor (MC4R) peptide agonist is targeting obesity caused by genetic deficiencies in the MC4 pathway, which regulates energy, homeostasis and food intake. MC4R agonists have potential for obesity, diabetes and related metabolic disorders.

As with its relamorelin program, Rhythm is seeking to improve safety and efficacy with RM-493 over the first generation of small-molecule MC4 agonists. The company's initial phase I and II trials showed promising evidence of weight loss without adversely increasing blood pressure – a key safety issue in small-molecule MC4R agonists.

Rhythm validated the MC4 target in obesity indications based on two scientific studies. One showed that 1 percent to 2 percent of obese people are heterozygous for a mutation of the MC4 receptor gene. Those individuals tend to be overweight, with a stronger effect if they are homozygous for the gene. A second study of RM-493 in obese rhesus monkeys showed an average loss of 13 percent of body weight without evidence of toxicity. (See BioWorld Today, June 13, 2012.)

Confirmation of the weight loss effect in humans – and a safer profile – could blast the Rhythm compound past Arena Pharmaceuticals Inc.'s Belviq (lorcaserin), Vivus Inc.'s Qsymia (phentermine/topiramate) and Orexigen Therapeutics Inc.'s naltrexone/bupropion, which completed an FDA-required cardiovascular outcomes study to address a complete response letter and has a PDUFA date of Sept. 11. (See BioWorld Today, June 28, 2012, and June 12, 2014.)

Both assets were obtained in 2010 from Ipsen SA, of Paris, which granted Rhythm an exclusive global license for research, development and commercialization of its melanocortin and ghrelin programs in return for milestone-based payments of up to $80 million plus royalties on product sales.

Ipsen also acquired a 17 percent equity stake in Rhythm, which subsequently raised approximately $73 million in two private equity rounds. Other major investors include MPM Capital, New Enterprise Associates, Third Rock Ventures and Pfizer Inc.

In its S-1, Rhythm reported cash and equivalents of $8.9 million and an accumulated deficit of $65.4 million as of June 30. The company plans to list on Nasdaq as RYTM. Citigroup and Cowen and Co. are joint book-running managers, with Canaccord Genuity Inc., Oppenheimer & Co. and Cantor Fitzgerald & Co. as co-managers on the deal, which is not yet priced.


Dermira, incorporated in 2010 as Skintelligence Inc., popped onto the dermatology scene in 2011 with a new name, a $42 million series A and a handful of assets acquired from industry and academia, including QLT Inc. spinout Valocor Therapeutics Inc. (See BioWorld Today, Oct. 24, 2011.)

CEO Tom Wiggans had firsthand experience in the space as head of Peplin Inc., which garnered positive data in its first pivotal trial of actinic keratosis drug PEP005 and was promptly acquired by LEO Pharma A/S for $287.5 million. (See BioWorld Today, Sept. 4, 2009.)

In 2013, Dermira raised another $35 million through a series B financing that included Japanese dermatology specialist Maruho Co. Ltd., of Osaka, and existing investors Bay City Capital, New Enterprise Associates and Canaan Partners, plus an undisclosed transaction. The combined funding was designed to allow Dermira to generate data on its clinical dermatology candidates. They include topical sebum production inhibitor DRM01, which completed a phase IIa study in acne and is expected to begin a phase IIb program in the first half of 2015; topical PDE4 inhibitor DRM02 to treat inflammatory skin diseases; and topical small-molecule anticholinergic candidate DRM04 to treat hyperhidrosis. DRM04 is in a phase IIb study that is expected to report data in the first half of next year. (See BioWorld Today, June 12, 2013.)

The Redwood City,, Calif.-based company also has a preclinical candidate, DRM05, for topical photodynamic therapy to treat acne.

Even before this week's IPO filing, 2014 was, perhaps, the biggest year yet for Dermira. The UCB license came with a $5 million equity payment and a commitment to invest another $15 million in future equity financings and $49.5 million in development and regulatory milestone payments. If Cimzia gains approval in psoriasis, UCB will record the sales, with Dermira set to receive tiered royalty payments and up to $40 million in tiered commercial milestones.

In June, Dermira and UCB conducted an end-of-phase II meeting with the FDA. In its filing, Dermira said it plans to work with UCB to file an investigational new drug application for Cimzia in moderate to severe plaque psoriasis in the second half of the year and to launch phase III trials in the first half of 2015.

Just last week, Dermira disclosed that it raised a $51 million series C round that included its existing investors – including UCB – along with new investors Apple Tree Partners, Aisling Capital, Rock Springs Capital, Sabby Capital and other undisclosed health care investors.

Dermira acknowledged in the S-1 that UCB plans to purchase approximately $7.5 million in common shares through a private placement after the IPO closes. Proceeds from the offering and placement will be used primarily to fund the development of Cimzia, DRM04 and DRM01.

The company reported cash and equivalents of $9.8 million and an accumulated deficit of $68.1 million as of June 30. Dermira plans to list on Nasdaq as DERM. Citigroup and Leerink Partners LLC are joint bookrunners, with Guggenheim Securities LLC and Needham and Co. LLC as co-managers. Pricing was not disclosed.

In other financings news:

Allakos Inc., of San Mateo, Calif., raised $24.5 million of a hoped-for $42 million in a series A financing round, according to an SEC filing. The firm is developing antibody-based therapeutics to treat diseases in which dysregulation of the T-helper type 2 immune response plays a key role in pathology, including allergic disease, inflammation and diseases characterized by excess production of inflammatory cells.

Armetheon Inc., of Menlo Park, Calif., raised $7 million in its first round of financing. The series A round was co-led by Ashhill Biomedical Investments and Hercules Bioventures with participation from investors that included Atheneos Capital and biotech entrepreneur and pharmaceutical executive Larry Hsu, the founder of Impax Laboratories Inc., of Hayward, Calif. (See BioWorld Today, April 15, 2013.)

Contrafect Corp., of Yonkers, N.Y., said the underwriter of its initial public offering has exercised its overallotment option, purchasing 880,333 additional units at the price of $6 each, making the gross proceeds about $41 million. (See BioWorld Today, July 30, 2014.)

Oncopep Inc., of Boston, closed a $6.9 million series B financing from new and existing investors. Proceeds raised will support the clinical development of PVX-410, currently studied in patients with smoldering multiple myeloma (SMM), an asymptomatic stage of MM. To date, 12 patients have been treated with vaccine alone in the ongoing phase I/IIa trial.

Syndax Pharmaceuticals Inc., of Waltham, Mass., set the terms for its initial public offering, aiming to raise $60 million by selling 4.3 million shares at a price range of $13 to $15. Deutsche Bank and Jefferies are the joint bookrunners on the deal. (See BioWorld Today, March 31, 2014.)