Against a backdrop of nearly 15 global biopharma IPOs on deck on a day when all major U.S. market indices fell, shares of cancer drug developer Zentalis Pharmaceuticals Inc. (NASDAQ:ZNTL) shot up 29% to $23.20 on April 3 after an upsized initial filing to sell 9.2 million shares at a top-of-range $18 each. The New York-based company expected to gross $165.2 million in the offering, which was underwritten by Morgan Stanley & Co. LLC, Jefferies LLC, SVB Leerink LLC and Guggenheim Securities LLC.

All shares are being offered by Zentalis and the offering is expected to close on April 7.

Zentalis' lead candidate, ZN-c5, is an oral selective estrogen receptor degrader (SERD) for estrogen receptor-positive, HER2-negative breast cancer (ER+/HER2-). The company expects to report top-line data from the phase I, monotherapy dose-escalation portion of an ongoing phase I/II trial in the second half of 2020. ER+/HER2- breast cancer affects about 70% of all breast cancer patients in the U.S., the company said in its S-1 filing.

The company is led by President and CEO Anthony Sun, who was most recently a partner at Aisling Capital. Other executives include former Psioxus Therapeutics Ltd. chief financial officer, Melissa Epperly; Kalyra Pharmaceuticals Inc.’s founder, Kevin Bunker; and Robert Winkler, who most recently served as head of clinical development at Taiho Oncology Inc.

Founded in December 2014, Zentalis was initially formed as Zeno Pharmaceuticals Inc. Today, its pipeline is primarily built around NCEs designed to address "observed limitations and suboptimal drug characteristics" of both marketed and development-stage products. ZN-c5, for example, is designed to overcome limitations of existing hormonal therapies, including the only FDA-approved SERD, Faslodex (fulvestrant, Astrazeneca plc), which generated global sales of $1.03 billion in 2018 – though revenues are now declining due to generic competition.

In May 2018, Zentalis entered a clinical development collaboration agreement with New York-based Pfizer Inc. to test ZN-c5 in combination with Ibrance (palbociclib), a CDK4/6 inhibitor, which is already approved for ER+/HER2- advanced breast cancer patients in combination with hormonal therapies. The pair are facing substantial competition in the SERD pipeline, according to a recent rundown by Jefferies equity research, which is tracking no fewer than 14 SERD programs in progress, including Zentalis'. Combination with Ibrance abounds in the race, as seen in combinations of that drug with Sanofi SA's SAR-439859, Astrazeneca's AZD-9833, Investisbio Inc.'s D-0502, and Roche Holdings AG's RG-6171, a candidate under development at its Genentech Inc. unit.

Zentalis’ other product candidates include ZN-c3, an inhibitor of WEE1, a protein tyrosine kinase, currently in a phase I/II trial for the treatment of advanced solid tumors; ZN-d5, a selective inhibitor of B-cell lymphoma 2, initially in development for the treatment of hematological malignancies; and ZN-e4, an irreversible inhibitor of mutant EGFR, currently in a phase I/II trial for the treatment of advanced non-small-cell lung cancer.

In addition, the company is exploring the potential of ZN-c5 in combination with BCL-2 inhibitors, including its BCL-2 inhibitor product candidate, ZN-d5, for the treatment of breast cancers.

Top-line data from the phase I portion of ongoing trials of ZN-c3 and ZN-e4 are expected to report out in 2021. The company is also planning to submit an IND for ZN-d5 in the first half of 2020 and, presuming approval of that, to initiate a phase I trial of ZN-d5 in patients with acute myeloid leukemia or B-cell lymphoma in the second half of 2020. Lead optimization for a fifth candidate is underway and the company plans to submit an IND to the FDA for it in 2021, it said.

Zentalis owns worldwide development and commercialization rights to each candidate, though Sciclone Pharmaceuticals International Development Ltd. has development and commercial rights to ZN-e4 in greater China, South Korea, Taiwan and Vietnam.

To date, Zentalis has raised $162.1 million from the sale of preferred unit financings, most recently through an $81.8 million series C financing in 2019 and a $9.5 million series B financing in 2018. Investors have included Alexandria Real Estate Equities, Eventide Asset Management, Farallon Capital, Highlight Capital, Matrix Capital Management, Mayo Clinic, Perceptive Advisors, Pharmaron, Redmile Group, Surveyor Capital, Tybourne Capital Management and Viking Global Investors. It qualified as an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012.

Keros on deck

Keros Therapeutics Inc., a company developing treatments for hematological and musculoskeletal disorders, is expected to be next out of the IPO gate. Keros, which expects to raise up to $77.6 million if underwriters of the offering exercise their full option to buy additional shares, is expected to price at $15 per share, listing on Nasdaq with symbol KROS.

The company's primary focus is on leveraging its understanding of transforming growth factor-beta, family of proteins, master regulators of red blood cell and platelet production as well as of the growth, repair and maintenance of muscle and bone. It intends to use proceeds of the offering to advance the clinical development of its lead candidate, a potential treatment for cytopenias called KER-050. It's an engineered ligand trap comprising a modified ligand-binding domain of the TGF-beta receptor known as activin receptor type IIA fused to the portion of the human antibody known as the Fc domain.

Other funds would go toward starting two phase II trials, one in patients with myelodysplastic syndromes and one in patients with myelofibrosis and to advance the clinical development of KER-047, including the completion of its phase I trial and the initiation of two phase II trials: one in patients with iron-refractory iron deficiency anemia and anemias with elevated hepcidin, including myelofibrosis, and one in patients with fibrodysplasia ossificans progressiva, and to advance KER-012 into clinical development, including the initiation of a phase I trial.

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