Accelerated Pharma takes up the Cancer Challenge and swings for IPO
Cancer biotech companies have been hitting the IPO stream in the first quarter of 2017 faster than in other periods. Some have been successful, riding on the wave of successful drug trials and eager markets, while others have been too overshadowed by uncertainty to do anything but downsize. Of all these firms, none has taken up the challenge as biotech start-up Accelerated Pharma has. So far, it is the only firm that has filed for an IPO while trying to revive a drug that failed with another company.
Founded in 2014, Westport, Connecticut-based Accelerated Pharma is a moderately sized drug-developing in its clinical trials phase. The company has one primary product at this point: Picoplatin. What some investors may not know about this product is that it was once in development by another pharmaceutical firm. When the drug failed its Phase 3 clinical trial phase, the firm abandoned it. However, Accelerated Pharma argued that the trials only went wrong because the first company had not taken into consideration its patients’ genetic makeup during that testing phase. By fact0ring in the makeup, Accelerated Pharma argues, it could put the product in the commercial market.
Accelerated Pharma licensed exclusive rights to a genome technology possibly compatible with the drug from Tallikut Pharma Inc. In return, the biotech start-up gave the Big Pharma company benefits that added up to an estimated 14.4% of its common stock. Currently, Tallikut Pharma is the only institution to own any shares in Accelerated Pharma. The rest of Accelerated Pharma’s shares belong to company executives and private shareholders.
Accelerated Pharma will list on NASDAQ under the stock label ACCP. The company will trade its own common stock and those from selling shareholders, all adding up to an approximate 2.4 million shares in the IPO. By selling the shares within the price range of $4 to $6 per share, Accelerated Pharma can raise up to $14 million dollars, with the targeted $12 million being raised at the midpoint. Only H.C. Wainwright & Co. will manage the deal.
According to the company’s prospectus, proceeds from the IPO will mainly go into funding its Phase 2 clinical trials for the primary product. You can imagine what that means. Money will be used to build labs, add equipment, hire scientists and even make a little of the drug itself for testing. Accelerated Pharma will also put some money into testing patients’ genomes before going into the testing phase. This will help increase the effectiveness of the drug, at least according to the biotech firm.
If the company succeeds in the testing phase, its shares will increase in value over time. Along the same line, the drug is to be tested on squamous and colorectal cancers. Already, projections for those market values are high with colorectal said to be $9.8 billion by 2020 and squamous $1.53 billion by 2024. Were Accelerated Pharma to dominate in this bracket it would have a multi-million valuation at the least. Several factors stand in the way of this, however. For one, investors are still skeptical that the small company can make a drug that Big Pharma failed with start working. Secondly, like all other start-ups, the company has no revenue stream and no products in the market. Lastly, there is just too much competition from deep pocket pharmaceutical firms within the colorectal cancer treatment market.