Akcea Therapeutics readies for second largest pharmaceutical company IPO of 2017

The number of people who either have diabetes or are obese in today’s global population is rising. These two conditions may not have a lot in common, but they share one trait. They are both risk factors for developing protein-related heart problems. Akcea Therapeutics is a company that hopes to one day capitalize on these growing numbers.

Akcea Therapeutics (Pending: AKCA) was formed in 2015. It is the Cambridge, MA-based spinoff of Ionis Pharmaceuticals Inc. (NASDAQ: IONS). Ionis Pharmaceuticals established Akcea Therapeutics to develop drugs to deal with lipid-related heart disorders. Since then Akcea has come up with various drugs and active ingredients which may not be in the market yet but will be there soon.

The Akcea Therapeutics IPO will be the second largest MA-based drug-related startup issuance since Intellia Therapeutics’ $108 million deal last year if it succeeds. Akcea would also become the second MA- based drug-developing firm to launch publicly after Jounce Therapeutics earlier this year. The Akcea IPO was priced at $100 million but the company didn’t state how many shares it would be selling or how much each share would go for on the NASDAQ public stock market.

Akcea is one company with growth projections to watch out for ahead of the IPO. The company’s target group is large today, and will only increase as time goes by so you can only expect Akcea’s future earnings to rise. The company faces stiff competition from larger pharmaceutical companies such as Amgen (NASDAQ: AMGN) and Mylan (NASDAQ: MYL) however. The two companies also deal in the protein-based disorders drug industry.

As you consider whether or not to take part in Akcea’s IPO, remember to look at Akcea’s obligations toward its parent company Ionis Pharma. If the IPO pays off Akcea will use a significant chunk of the proceeds to fulfill obligatory debt to Ionis. That means there will be less money available for the company to consider expansion or development post-IPO.

Akcea Therapeutics is not on a wholly negative standpoint as it prepares to start trading. For one, the company has a licensing partnership with R&D. So far Akcea has received an estimated $9.6 million in collaborative revenue from R&D. The firm is set to receive even more money as more of its drugs head into the final stages of clinical testing.

Novartis Inc. (NYSE: NVS) has also partnered with Akcea and its parent company Ionis. The company agreed to pay Akcea $75 million up front on the formation of the partnership. Acea will also have an additional $50 million coming in should it reach its $100 million IPO target. Akcea estimates that its deal with Novartis could be worth up to $1.6 billion in milestone revenue and drug production income in future.

After the IPO, Akcea will use its proceeds to further phase 2 trials on some of its products. The company will also bankroll the marketing of Akcea’s lead candidate with the funds. the product has completed its phase 3 trials and is now ready for approval and commercial sale. Akcea will use the remaining funds to fulfill its obligation to Ionis and to fund its corporate operations.