Amid Biotech Swoon, Third Rock’s MyoKardia Tees up IPO
Does the biotech bull market still have a pulse? MyoKardia, a three-year-old startup developing heart drugs, will soon try to find out.
The San Francisco-based company filed papers with the SEC on Monday to go public and trade on the Nasdaq under the ticker symbol “MYOK.” MyoKardia would use the cash to advance its work in drugs for certain forms of genetically triggered heart disease, like hypertrophic cardiomyopathy (HCM). And it’ll ask investors to buy into a company without a whole lot of clinical data as of yet—the first of its prospects, a drug known as MYK-461, is in Phase 1 tests that are expected to wrap up in the middle of next year.
Filing for an IPO at an early stage of the game has been a common theme during the recent biotech boom. Companies like Bluebird Bio (NASDAQ: BLUE), Agios Pharmaceuticals (NASDAQ: AGIO), and Dicerna Pharmaceuticals (NASDAQ: DRNA) were each able to pull off big IPOs despite having little, if any, human data when they filed. (Bluebird and Agios have since gained traction with promising early data; Dicerna has yet to break out.) Successful biotech IPOs have helped fuel the sector’s resurgence.
The question, however, is if things have changed of late. Biotech has a target on its back in Washington, as escalating drug costs have become a major political talking point. The Turing Pharmaceuticals fiasco last week was a particular flash point, but as recently as today Democrats in the House oversight committee asked the committee chairman Jason Chaffetz to subpoena Valeant Pharmaceuticals (NYSE: VRX), questioning price increases the company has instituted for two heart drugs. Shares of Valeant plummeted more than 15 percent, dragging other biotech stocks—which have been lagging amidst the pricing debate—down with it.
Will all this slam the IPO window shut? Before the pricing brouhaha, gene therapy startup RegenXBio (NASDAQ: RGNX) beat its projections and raised $122 million from investors on Sept. 16. But biotech indices have since slumped—the Nasdaq Biotechnology Index (NASDAQ: IBB) is down more than 13 percent since its Sept. 18 closing. It’ll be interesting to see how Edge Therapeutics and Mirna Therapeutics, both scheduled to debut this week, will fare.
MyoKardia, meanwhile, was founded by Boston VC firm Third Rock Ventures in 2012. Third Rock led a Series A round for MyoKardia, and still has a massive stake in the company—52.67 percent of its equity. The only other institutions with a greater than 5 percent stake are Fidelity (13.19 percent) and Sanofi (11.22 percent). All told, MyoKardia raised about $75 million in venture funding before its IPO, and had some $73 million in cash on hand as of June 30, filings show.
MyoKardia’s aim is to develop small molecule pills for groups of people with common genetic mutations that trigger certain heart diseases. Among these are HCM—the disease killed young basketball stars Hank Gathers and Reggie Lewis—which can cause sudden, fatal strokes in young adults, and dilated cardiomyopathy (DCM), the most common form of cardiomyopathy. MyoKardia estimates that about 630,000 people in the U.S. have a form of HCM. Around 400,000 have a form of DCM that’s the result of a genetic mutation, and would theoretically benefit from a MyoKardia treatment, the company said in its prospectus.
MYK-461 is a pill that’s supposed to correct the irregular heartbeats of HCM and ultimately halt the progression of the disease. So far, the drug was tested in 48 healthy volunteers at multiple doses and appeared to affect what’s known as “contractility”—essentially, the strength of heart muscle contractions. MyoKardia says this is an important biomarker of disease, but more clarity regarding the drug’s worth will come to light over the next year when two additional Phase 1 trials produce data—among them a study in actual HCM patients. MyoKardia expects to begin Phase 2 trials of MYK-461 in the second half of 2016, assuming all goes well in early testing. The company is “evaluating several novel drug compounds” for DCM, meanwhile, and aims to start a Phase 1 trial in early 2017.
Sanofi cut a $245 million deal with MyoKardia a year ago to co-develop two programs for HCM and one for DCM. The startup has gotten $50 million in cash and equity funding out of that deal so far. MYK-461 isn’t part of that deal, filings show.
Credit Suisse, Cowen and Co., BMO Capital Markets, and Wedbush Securities are underwriting MyoKardia’s IPO.