Biopharmaceutical company Zymeworks Inc. (Vancouver BC) on Monday (April 3, 2107) said it has filed with the US Securities and Exchange Commission for an initial public offering. The company, which develops cancer treatments, said it intends to list on the New York Stock Exchange and the Toronto Stock Exchange under the ticker symbol “ZYME.” Cannacord Genuity is acting as lead manager; Citigroup, Barclays and Wells Fargo are joint book runners. Cormark Securities is co-manager.
Zymeworks has been high-fiving its way through a series of partnerships and expansion projects focused on its bispecific antibodies and armed antibody-drug conjugates (ADCs)–two platforms Zymeworks will now depend upon to raise at least $75 million in an IPO.
The company has built its reputation around a lineup of big biopharma deals, Endpoints notes. In addition to early backers Eli Lilly and Celgene, GlaxoSmithKline and Merck also have jumped on board the biotech’s primary Azymetric drug development platform. Daiichi Sankyo is the latest company to join in. And Zymeworks recently added a 10,000-square-foot lab in its Vancouver base.
Its lead program–ZW25–(now in the clinical stage) uses a bispecific technology “to address patient populations with all levels of HER2 expression,” reads the F-1 (Registration Statement), “including those with low to intermediate HER2-expressing tumors, who are otherwise limited to chemotherapy or hormone therapy.”
Zymeworks now joins a short list of companies that are trying to make a leap into the public market. While CEO Ali Tehrani wanted to pick his time, the biotech IPO market has been shaky in early 2017, with some successes and some failures. “We’re a long way from the boom days of 2014,” Tehrani notes.
This particular biotech, though, has a long list of backers. The co-lead investors in the last round were BDC Capital and Lumira Capital, first-timers, with existing investors CTI Life Sciences Fund and the Fonds de solidarité FTQ jumping in. Other new investors in the latest financing included Perceptive Advisors, Teralys Capital, Northleaf Venture Catalyst Fund, Brace Pharma Capital and Merlin Nexus.
It’s been about a decade, but over the next few weeks investors, both in the US and Canada, will decide whether to support a Vancouver-based biopharmaceutical company. Financial Post notes that the last Canadian biopharmaceutical IPO by a Canadian company onto a Canadian exchange was Winnipeg-based Imris Inc. which raised $40 million in a 2007 offering.
Now, Zymeworks filed documents with Canadian and US regulatory authorities for an initial public offering. Plans call for the shares to be listed on the NYSE and on the TSX. According to the registration statement filed with the Securities & Exchange Commission (the full document runs to 302 pages; three less than the Canadian prospectus) the company plans to raise a maximum of US$75 million.
From all appearances it would seem the bulk of the shares will be sold to US investors. For starters, the company qualifies as an “emerging growth company” under the Jumpstart Our Business Startups Act, or the JOBS Act, that was signed by President Obama in 2012. That status brings certain benefits including exemptions from various requirements that are normally applicable to public companies in the United States.
A couple of other reasons are in play, says Financial Post: the shares are set to be denominated in US dollars and the underwriters are either US firms or the US firms of Canadian investment dealers. Three US firms, Citigroup, Barclays and Wells Fargo Securities, carry the title of joint book-running managers, while Canaccord Genuity is a lead manager and Cormark Securities (USA) Ltd. is a co-manager.
Zymeworks defines itself as “a clinical-stage biopharmaceutical company dedicated to the discovery, development and commercialization of next-generation multifunctional biotherapeutics, initially focused on the treatment of cancer.” The company, which has been around since 2003, operates under the trademark, “Building Better Biologics.” And it generates revenue: $11 million in the year ended Dec. 31 2016–up from $9.66 million the previous year and $1.67 million total before that.
Over those recent three years Zymeworks has operated with larger losses. But it has been able to attract considerable support from outside shareholders, the largest of which is Eli Lily, which has a 17.5% stake. Montreal based CTI Life Sciences Fund is the next largest with a 14.6% stake, while investment funds owned by Ian Ihanatowycz (the founder of Acuity Investment Management which was later sold to AGF Management) is listed as the third largest shareholder with an 8.5% stake. US based Celgene Alpine Investment Co. with a 6.1% stake, is the only other shareholder with a stake of more than 5%. As a group, the executive officers and directors have a 14.7% interest.
None of the current shareholders are planning to sell any of their holdings into the IPO. Instead all the proceeds will flow to the company, which plans to use a portion to fund the clinical development expenses for two of its “product candidates”–ZW25 and ZW33. The former is in an “ongoing adaptive Phase 1 clinical trial,” while the latter is set for a “planned Phase 1 clinical trial.”Steve's Take: @Zymeworksinc has all the earmarks of a successful #IPO Click To Tweet
This company has all the earmarks of both a successful IPO pop and clinical/commercial future going forward. So if you ever wanted to get a piece of an IPO in this roll-the-dice investment space, this might be it. Easier said than done, depending upon your status with whomever is investing your money. But the clock is now ticking. Enough said.