IPOs may be the new key to Cancer Funding: Zymeworks
Based in Vancouver, Canada, Zymeworks is a nationally renowned cancer biotech company. With over a decade of experience in various fields in the drug industry, Zymeworks has now decided to put itself on the US market. The company wants to raise money to join in the fight against the world cancer epidemic.
Previously Zymeworks research has been Canadian-investor-funded. Investor companies included BDC Capital, Lumira, and Brace Pharma. These companies all bought stock from the drug-making firm when it started trading publicly in Canada.
Zymeworks operates two drug-making platforms, Azymteric, and Effect. It allows drug manufacturers to use the platforms in their clinical tests for a cost. Zymeworks got further funding from partnerships with related firms. Firms like Eli Lilly, Celgene, and Merk have shown that yes, they want the Zymeworks product to succeed. These investors and partners have enabled the company to grow, but it still needs more funding. Apparently testing cancer products is a very expensive business.
Zymeworks plans to sell its shares in the NYSE market under the stock label ZYME. With all 4.5 million common shares on offer sold at the set share range of $13 to $16, the company will bring in approximately$65 million in revenue. The market capital of Zymeworks is expected to be $361 million post-IPO. Eli Lilly will bid on 64% of the stock on offer (valued at $42 million) to prevent market dilution of its current holdings in Zymeworks.
If Zymeworks IPOed today, it’d do very well on the NYSE market. Zymeworks will enter the US market backed by a significant number of venture capitalists. Additionally, Zymeworks has grown since its formation in 2003 under the guidance of its CEO Dr. Ali Tehrani. Dr. Tehrani jokingly compared the growth of Zymeworks to the rise of a geek to a sheik, and not without cause. During its years of operation, Zymeworks has taken part in many licensing technology deals. The company’s strategic investments and countless acquisitions have seen its revenue increase times over during this period, cementing its place in the Canadian biotech market. In 2016, the company experienced a 14% revenue surge to 11 million from 2015.Net loss also decreased by 33.8% from 2015 to 2016, a sign that the company is on its way to bringing in substantial profits.
With its success in the biotech market, Zymeworks decided to try its hand in the drug-making cancer industry. Currently, two of its products, the ZW25 and the ZW33, are in their testing phases. Zymeworks plans to use its IPO proceeds to fund the ZW25 Phase 1 trial, with testing for the ZW33 set to take place in the 2H17.Both compounds fight cancer cells by targeting the HER2 proteins that make the cancer cells grow although the ZW33 has added cancer-killing properties. These products could be alternatives to chemotherapy and hormone therapy. These two therapies do not effectively work for patients with low HER2 levels in their tumors.
The Zymeworks IPO announcement comes after those of other cancer treatment companies like Argenx and Tocagen, leading to the conclusion that the future of cancer research funding might just be in IPOs.