Uh-oh: Another Biotech Calls Off an IPO at the Last Minute

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Only days after UK-based Mereo BioPharma canceled its plans for an initial public offering (IPO) on the Nasdaq Global Market, Framingham, Massachusetts-based Alzheon dropped its IPO plans.

Mereo, which is already listed on the London Stock Exchange, was planning to raise about $75 million to help take at least two of its drugs into late-stage clinical trials. It was planning to use $50 million to take BPS-804 through Phase IIb for osteogenesis imperfecta and into a late-stage trial, and BGS-649, for hypogonadotropic hypogonadism in obese men, into mid-stage trials. It also has other drugs in development.

Mereo’s rationale for ending its IPO was, according to the company’s chief executive officer Denise Scots-Knight, “challenging stock market conditions.”

Which received some pushback from investors and analysts, because most recently, two IPOs, MorphoSys and Surface Oncology, brought in a combined $316 million with their IPOs.

Alzheon filed in March for its IPO with plans to raise up to $81 million. The company is attempting to take a beta amyloid blocker for Alzheimer’s disease into a Phase III pivotal trial. It acquired the rights to the drug, tramiprosate, from Neurochem, currently named Bellus Health, in 2013, after it failed in a 2009 clinical trial. Alzheon believed that by focusing on patients with two copies of the APOE4 gene, which has been shown to be linked to Alzheimer’s, they would have a better shot at approval.

At the Alzheimer’s Association International Conference in 2016, it reported promising Phase Ib data. It expected to start a Phase III in the first half of 2017, but that was delayed until later this year, and now that’s in limbo.

Not much is known about why Alzheon postponed its IPO. It sent a message to investors, and Renaissance Capital released a brief statement about it. The initial filing was to offer 5 million shares at a price of $13 to $15.

It’s quite possible that recent failures—in addition to a lengthy list of failures over the last 15 years—in Alzheimer’s drug trials has made the chances of a successful IPO even more unlikely.

Earlier this month, vTv Therapeutics azeliragon failed to meet either co-primary efficacy endpoint in its Phase III STEADFAST clinical trial for patients with mild Alzheimer’s disease.

Earlier this year Merck & Co.'s verubecestat (MK-8931) failed its APECS Phase III clinical trial for Alzheimer’s.

Axovant Sciences intepirdine failed in its MINDSET Phase III trial in September 2017. This is particularly notable in the context of Alzheon, because, although their drugs were different, their business model was similar. Axovant, one of Vivek Ramaswamy’s biotech startups, acquired its drug for mild-to-moderate Alzheimer’s disease for $5 million from GlaxoSmithKline. It had a favorable safety and tolerability profile, and in a Phase IIb trial, showed immediate and sustained efficacy over placebo. But it had been abandoned by GSK after four failed clinical trials. Ramaswamy felt the drug might be effective in a narrow patient population, and convinced investors of the theory. But the drug failed dramatically in its Phase III trial, failing to meet is co-primary efficacy endpoints, with “essentially no difference between the intepirdine and placebo arms in change from baseline in activities of daily living,” according to a statement by the company.

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