News Column

IPO Report: Ambrx (AMBX)

June 23, 2014

Francis Gaskins

Ambrx ($AMBX) is a clinical stage biotechnology company focused on discovering and developing first-in-class and best-in-class optimized protein therapeutics known as bio-conjugates. It is headquartered in La Jolla, CA.

Fourteen other companies are scheduled for the week of June 23, 2014. The complete IPO calendar is available at IPOpremium.

The manager and joint managers are Stifel and Wells Fargo Securities. The co-managers are Canaccord Genuity, Needham, and Roth Capital Partners.

AMBX scheduled a $70 million IPO on the Nasdaq with a market capitalization of $223 million at a price range midpoint of $13 for Wednesday, June 25, 2014. SEC filings

Ambrx IPO Report

Conclusion



To-date AMBX has only completed Phase 1 clinical trials. 

The price-to-book is 2.5, which is relatively low for the current batch of biotech/biopharma IPOs.

AMBX does have the potential to receive $1.5 billion in milestone payments.

The rating on AMBX is neutral.

Overview



AMBX is a clinical stage biotechnology company focused on discovering and developing first-in-class and best-in-class optimized protein therapeutics known as bio-conjugates.

To date, AMBX's collaborations have provided it with over $200 million in non-dilutive funding and have the potential to provide over $1.5 billion in potential milestone payments, plus royalties on the sale of collaboration products.

However, to-date AMBX has only completed Phase 1 clinical trials.

Valuation



Glossary



Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO



annualizing q1 '14

         


Ambrx (AMBX)

$224

11.2

-10.4

2.5

2.5

31%

Business



AMBX is a clinical stage biotechnology company focused on discovering and developing first-in-class and best-in-class optimized protein therapeutics known as bio-conjugates.

AMBX's  proprietary technology platforms enable it to attach pharmaceutically active molecules to specific sites within proteins, a process known as site-specific conjugation, and to design biologics with precision that is similar to that used to design modern small molecule drugs.

Protein medicinal chemistry



AMBX refers to this as protein medicinal chemistry.

AMBX believes its ability to target specific sites of conjugation more precisely than prior generations of bio-conjugates and produce homogeneous therapeutics allows AMBX to discover new protein drugs and design safer, more effective versions of current therapeutics.

Pipeline



AMBX has developed a pipeline of novel product candidates that include antibody drug conjugates, or ADCs, bi- and multi-specific drug conjugates and long-acting therapeutic proteins. AMBX's most advanced ADC program is ARX788, an ADC for cancers expressing human epidermal growth factor 2, or HER2, for which AMBX intends to begin clinical trials in early 2015.

AMBX's most advanced long-acting proteins are ARX201, a once-weekly human growth hormone, or hGH, that has successfully completed a Phase 2b clinical trial, and ARX328, a long-acting leptin for lipodystrophy and weight management; AMBX intends to submit an investigational new drug application, or IND, to the U.S. Food and Drug Administration, or FDA, for ARX201 in the second half of 2014 and for ARX328 in mid-2014.

Collaborations



In addition to its internal pipeline, AMBX collaborates with leading pharmaceutical companies, including Bristol-Myers Squibb Company ($BMY), Merck ($MRK), Eli Lilly ($LLY), Agensys, Inc., Zhejiang Medicine Co., Ltd., and Zhejiang Hisun Pharmaceutical Co., Ltd.

Revenue from collaborations



To date, AMBX's collaborations have provided it with over $200 million in non-dilutive funding and have the potential to provide over $1.5 billion in potential milestone payments, plus royalties on the sale of collaboration products.

Most advanced product candidate ready for Phase 2 clinical trials



AMBX's most advanced collaboration product candidate in human health is ARX618, a long-acting Fibroblast Growth Factor 21, or FGF21, for type 2 diabetes, which AMBX's collaborator BMS has advanced through Phase 1 clinical trials and expects to begin Phase 2 clinical trials for in mid-2014.

Biologic drug market



According to data from the IMS Institute for Healthcare Informatics, global sales of biologic drugs, defined as proteins, antibodies and vaccines, were approximately $157 billion in 2011.

Over the past 30 years, biologic drugs have had a dramatic impact on disease therapy. Genetically engineered, or recombinant, proteins such as insulin and interferon have become mainstay therapies in the treatment of a broad range of diseases.

Similarly, antibodies such as Herceptin and Humira have had a significant impact on the treatment of certain diseases, most notably cancer and autoimmune diseases.

Despite their success, many biologics have limitations, including a short half-life, a measure of duration of action in the body, for therapeutic proteins, and limited potency for naked antibodies.

Bio-conjugate technologies have been designed to address these limitations by attaching molecules to proteins of interest. For example, for therapeutic proteins, molecules such as polyethylene glycol, or PEG, have been attached to extend their half-life, and cell-killing, or cytotoxic, molecules have been attached to antibodies to increase their potency.

Although an improvement on prior biologics, earlier generation bio-conjugate technologies generally conjugate to an amino acid that is present at multiple sites in the protein and therefore do not allow for conjugation at a specific site.

As a result, drug product from the same production run may consist of proteins that are conjugated at different sites and with a different number of conjugated molecules, which is known as heterogeneity.

Dividend Policy



No dividends are planned.

Intellectual Property



AMBX believes that it has a significant global intellectual property position and substantial know-how relating to the incorporation of non-natively encoded amino acids into proteins.

AMBX's intellectual property portfolio currently contains over 50 issued U.S. patents and over 40 pending U.S. patent applications that AMBX owns.

In addition, AMBX has exclusively licensed certain patent rights from TSRI, including over 20 issued U.S. patents and two pending U.S. patent applications.

Collectively, these patent rights relate to various aspects of AMBX's technology platforms, its proprietary reagents and linkage chemistries, its product candidates and its collaborators' product candidates.

Competition



While AMBX believes that its technology platforms, product candidates, know-how, experience, and scientific resources provide AMBX with competitive advantages; AMBX faces competition from major pharmaceutical and biotechnology companies, academic institutions, governmental agencies, and public and private research institutions, among others.

Any product candidates that AMBX successfully develops and commercializes will compete with existing therapies and new therapies that may become available in the future.

Key product features that would affect AMBX's ability to effectively compete with other therapeutics include the efficacy, safety, and convenience of its products.

The level of generic competition and the availability of reimbursement from government and other third-party payers will also significantly impact the pricing and competitiveness of AMBX's products.

AMBX's competitors also may obtain FDA or other regulatory approval for their products more rapidly than AMBX may obtain approval for ours, which could result in its competitors establishing a strong market position before AMBX is able to enter the market.

5% stockholders



Tavistock BIO XXV, Inc. 19.3%                                                

Funds affiliated with Maverick Capital Ltd. 17.4%

Apposite Healthcare Fund, L.P. 9.5%    

Use of proceeds



AMBX expects to net $62 million from its IPO. Proceeds are allocated as follows:

$11.5 million to advance ARX201 through the completion of a Phase 2 clinical trial in children with GHD, of which $2.0 million would be used to advance ARX201 through the completion of a bridging study in adults with GHD;

$10.0 million to advance ARX328 through the completion of a Phase 1a clinical trial in healthy volunteers and overweight or obesity class 1 subjects;

$22.0 million to advance one of PSMA ADC, CD70 ADC, bi-specific anti-CD3 X Folate or CD184-FK506 ADC through preclinical development to the end of the first clinical safety trial; and

the remainder for research and development, working capital and general corporate purposes.


 


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Source: Equities.com


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