The company is advancing immuno-oncology and genetic-based treatments for various cancer indications.
PSTX is still at a very early stage of development with an ultra high risk profile, the IPO valuation is quite high and there is no investor support for the IPO, so my opinion is NEUTRAL.
Company & Technology
San Diego, California-based Poseida was founded to develop CAR-T and Cas-CLOVER genetic therapy approaches to treating blood cancers and other cancers.
Management is headed by Chief Executive Officer Mr. Eric Ostertag, M.D., Ph.D, who has been with the firm since 2015 and was previously CEO and president of Transposagen, a gene editing company.
Below is a brief overview video of Poseida’s approach:
Source: Alliance for Regenerative Medicine
The firm’s lead candidate is P-BCMA-101, a CAR-T treatment for patients with multiple myeloma.
The drug is currently in Phase 2 trials, which if successful, could support the firm seeking accelerated regulatory approval.
P-BCMA-101 and P-PSMA-101 for prostate cancer are the only drugs in clinical trials for the firm. All other drug candidates are still at preclinical stages.
Below is the current status of the company’s drug development pipeline:
Source: Company S-1 Filing
Investors in the firm have invested at least $227 million and include Malin Life Science, Novartis Pharma (NVS), and Longitude Venture Partners.
Market & Competition
According to a 2020 market research report, the global market for multiple myeloma treatments was valued at $19.5 billion in 2018 and is expected to reach an estimated $31 billion by 2026.
This represents a forecast CAGR (Compound Annual Growth Rate) of 6.0% from 2019 to 2026.
Key elements driving this expected growth are an increasing amount and pace of investment in new treatments as well as increased demand as the global population of aged persons grows along with decreased immune system function.
Also, North America currently provides the highest demand by region, with Europe emerging as the second largest market in the years ahead
There are many firms developing CAR T approaches to cancer treatments, too many to list here, but they include major biopharma companies across the globe.
In addition, companies are developing gene therapy technologies and they include large pharma and small biopharma firms.
Management says its patent estate provides it with ‘substantial intellectual property protection.’
Poseida’s recent financial results are typical of a clinical stage biopharma in that they have recorded no revenue but significant R&D and G&A costs associated with advancing their programs through development.
Below are the company’s financial results for the past two and ¼ years (Audited PCAOB for full years):
Source: Company registration statement
As of March 31, 2020, the company had $103.4 million in cash and $29.2 million in total debt. (Unaudited, interim)
PSTX intends to sell 10 million shares of common stock at a midpoint price of $15.00 per share for gross proceeds of approximately $150.0 million, not including the sale of customary underwriter options.
No existing shareholders have indicated an interest to purchase shares at the IPO price, a feature of some successful life science IPOs.
Assuming a successful IPO at the midpoint of the proposed price range, the company’s enterprise value at IPO would approximate $867.2 million.
Excluding effects of underwriter options and private placement shares or restricted stock, if any, the float to outstanding shares ratio will be approximately 17.3%.
Per the firm’s most recent regulatory filing, it plans to use the net proceeds as follows:
for our ongoing clinical development of P-BCMA-101 for relapsed/refractory multiple myeloma, including clinical trial costs and manufacturing expenses;
for our ongoing clinical development of P-PSMA-101 for mCRPC, including clinical trial costs and manufacturing expenses;
for our planned clinical development of P-BCMA-ALLO1 for relapsed/refractory multiple myeloma, including clinical trial costs and manufacturing expenses; and
the remainder for developing our gene therapy and other CAR-T preclinical product candidates and research programs, as well as for working capital and other general corporate purposes.
Management’s presentation of the company roadshow is available here.
Listed underwriters of the IPO are BofA Securities, Piper Sandler and William Blair.
Poseida is seeking a larger than typical IPO transaction size and there is no existing investor support for the IPO.
For its lead candidate, the firm is currently in Phase 1/2 trials and the firm expects to publish a data update by the end of 2020 for its multiple myeloma program and early 2021 for its prostate cancer trial.
The market opportunities for the firm’s entire pipeline are quite large in the aggregate and the breadth of its development activities is wide.
Management has disclosed no research collaborations with major pharma firms, a feature I prefer to see as an indicator of scientific validation, however Novartis is an investor in Poseida and will hold approximately 10.2% of the firm’s stock post-IPO.
As to valuation, the IPO is valued well above the $500 million top end of the range for a typical biopharma IPO.
Additionally, the firm is still at a very early stage of development with a very high risk profile and there is no investor support for the IPO, so I’ll watch the IPO from the sidelines.
Expected IPO Pricing Date: July 9, 2020.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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