Chiasma files for $86m Nasdaq IPO

Roni Mamluk

Chiasma has developed an orally administered drug for treatment of acromegaly.

Just three months after raising $70 million in a private placement, pharmaceutical company Chiasma has filed with the US Securities and Exchange Commission (SEC) for an $86 million Nasdaq IPO. The company value for the offering is difficult to estimate, since it depends on the state of the market, but Chiasma is believed to be aiming at a $400-500 million value. Barclays Capital and Cowen & Co. are leading the offering.

Chiasma recently submitted a request for marketing approval of its drug for treatment of acromegaly. The request was made independently, without partners, a unique step for both Israeli pharmaceutical companies and companies holding IPOs.

Chiasma's drug is an oral version of an existing drug marketed by Novartis for treatment of the disease. Sales of this drug and similar injectables for treatment of acromegaly total $730 million annually, while sales of all drugs for treatment of the disease total $2 billion. Injection of these drugs is considered very painful, and requires a trip to the hospital.

A clinical trial conducted by Chiasma showed that its drug, administered orally twice a day, prevented side effects like pain and irritation in the area of the injection, and also alleviated the symptoms of the disease, in comparison with the existing treatment. Chiasma is developing a number of additional products based on the same technology, so that drugs that currently require injection or an IV can be taken orally.

Chiasma's IPO is also unique, because Chiasma's leading product has already been given a price tag by Roche. This international company acquired the product in February 2013 before the Phase III trial in exchange for a $65 million advance and future payments of up to $600 million, depending on milestones and the product's success.

Roche's Phase III trial for the product was successful, but the company elected to return it to Chiasma in August 2014 instead of continuing to develop it, while calling the trial a success. Roche paid Chiasma a total of $90 million during the period of the agreement between them.

Assuming that we accept Chiasma's statement that Roche gave up the drug because of internal changes, not because the clinical data were in any way disappointing or the market smaller than expected, the estimate of the project's value by an industry expert , at least as of 2013, can be deduced from this agreement. It should be noted, however, that since the agreement was signed, Novartis has bolstered the competitiveness of its injectable product, which can now be administered once a month, compared with two pills a day of Chiasma's product.

Acromegaly causes accelerated growth of the bones, due to increased emission of growth hormone caused by a benign brain tumor. One prominent patient suffering from this disease was André René Roussimoff ("Andre the Giant"), who acted in a number of films, including "The Princess Bride." Without suitable treatment, most patients die at a fairly young age due to heart complications. There are tens of thousands of patients with the disease in the US, and several hundred thousand worldwide. The cost of treatment comes to several hundred thousand dollars a year per patient.

The US Food and Drug Administration (FDA) is slated to notify Chiasma in July whether its file of documents fulfills the minimum requirement for thorough testing. If the answer is positive, such testing will begin, and could take many months.

the company almost closed twice but has raised money in recent years under former CEO and today Chief Development Officer Dr. Roni mamluk.

Published by Globes [online], Israel business news - www.globes-online.com - on June 16, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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