Company Overview
| Company Name |
AUDEO ONCOLOGY, INC. |
| Company Address |
100 PINE STREET, SUITE 2040
SAN FRANCISCO, CA 94111 |
| Company Phone |
61-07-3340-0200 |
| Company Website |
www.audeooncology.com |
| CEO |
Peter Smith |
| Employees (as of 9/30/2012) |
17 |
| State of Inc |
DE |
| Fiscal Year End |
6/30 |
| Status |
Filed (7/6/2012) |
| Proposed Symbol |
AURX |
| Exchange |
Nasdaq National Market |
| Share Price |
14.00 - 16.00 |
| Shares Offered |
3,250,000 |
| Offer Amount |
$59,800,000.00 |
| Total Expenses |
$2,876,376.00 |
| Shares Over Alloted |
487,500 |
| Shareholder Shares Offered |
-- |
| Shares Outstanding |
10,842,020 |
| Lockup Period (days) |
180 |
| Lockup Expiration |
-- |
| Quiet Period Expiration |
-- |
| CIK |
0001552899 |
We estimate that the net proceeds from our issuance and sale of common stock
in this offering will be approximately $42.5 million, or $49.3 million if the
underwriters exercise their over-allotment option in full, based on an assumed
initial public offering price of $15.00 per share, the midpoint of the estimated
price range set forth on the front cover of this preliminary prospectus, after
deducting estimated underwriting discounts and commissions and estimated
offering expenses payable by us (including $237,775 of offering expenses already
paid by us through September 30, 2012). Each $1.00 increase (decrease) in the
assumed initial public offering price would increase (decrease) the net proceeds
to us from this offering by approximately $3.0 million, assuming the number of
shares offered by us, as set forth on the front cover of this prospectus,
remains the same and after deducting the estimated underwriting discounts and
commissions.
The principal purposes of this offering are to obtain additional capital,
facilitate our future access to the public equity markets, create a public
market for our common stock and generally increase the awareness of our
company.
We currently intend to use the net proceeds we receive from this offering as
follows:
. approximately $21.0 million to complete our pivotal Phase III clinical trial
and related regulatory filings for HA-Irinotecan for the treatment of mCRC;
. approximately $6.6 million to prepare for commercial-scale manufacturing of
HA-Irinotecan, if approved for the treatment of mCRC, which would entail
procurement of key raw materials, developing and validating a manufacturing
process to manufacture commercial-scale quantities of product and preparing
and filing regulatory documents;
. approximately $3.9 million to fund our research and development activities
related to our HyACT platform;
. approximately $3.8 million to fund our research and drug discovery
activities related to our in-licensed VAST drug discovery technology; and
. the balance for general corporate purposes, including working capital and
capital expenditures, which may include the acquisition or in-licensing of
additional compounds, product candidates and technology, although we have no
present commitments or agreements to enter into any such acquisitions.
The amounts set forth in the first bullet point above reflect our estimate, as
of November 1, 2012, of the cost of completing our pivotal Phase III clinical
trial and related regulatory filings for HA-Irinotecan for the treatment of
mCRC, and this estimate is subject to assumptions and uncertainties, and there
can be no assurance that the actual costs will not be greater.
The expected uses of the net proceeds we receive from this offering represent
our intentions based upon our current plans and business conditions. The
amounts and timing of our actual expenditures may vary significantly depending
on numerous factors. Accordingly, we will have broad discretion over the uses
of the net proceeds in this offering and investors will be relying on the
judgment of our management regarding the application of the net proceeds. In
addition, it is possible that the amount set forth above will not be
sufficient for the purposes described above.
Pending these uses, we intend to invest the net proceeds from this offering in
interest bearing and similar investments with terms of 18 months or less,
which may include interest-bearing bank accounts, money market funds,
certificates of deposit and government securities.
The biotechnology and pharmaceutical industries are characterized by rapidly
advancing technologies, intense competition and a strong emphasis on
proprietary products. While we believe that our technology, clinical
development experience and scientific knowledge provide us with competitive
advantages, we face competition from many different sources, including major
pharmaceutical, specialty pharmaceutical and biotechnology companies, academic
institutions and governmental agencies and public and private research
institutions. Any product candidates that we successfully develop and
commercialize will compete with existing treatment regimens and new treatment
regimens that may become available in the future.
Many of our competitors have significantly greater financial and other
resources and expertise in research and development, manufacturing,
preclinical testing, conducting clinical trials, obtaining regulatory
approvals and marketing approved products than we do. It is possible that
competitors may develop new products in our target market before we are able
to develop such products. There are a number of companies that carry out some
form of competitive activities. Competitive activities could include
developing reformulations of irinotecan and other anti-cancer drugs for use in
oncology applications, exploiting HA as a therapeutic, researching and
developing product candidates from applied research on cancer stem cells, and
conducting late stage clinical development for application in colorectal
cancer. These competitors also compete with us in recruiting and retaining
qualified scientific and management personnel and establishing clinical trial
sites and patient registration for clinical trials, as well as in acquiring
technologies complementary to, or necessary for, our programs. Smaller or
early stage companies may also prove to be significant competitors,
particularly through collaborative arrangements with large and established
companies. Our lead product candidate is HA-Irinotecan for the treatment of
metastatic colorectal cancer, or mCRC, and the following table shows potential
competitors with drugs approved or in late stage clinical development for mCRC
as of November 1, 2012:
Company Drug Name Stage of Development
Bayer-Schering regorafenib Approved
Sanofi/Regeneron aflibercept Approved
Light Sciences Oncology talaporfin sodium Phase III
Nektar Therapeutics PEG-irinotecan Phase II
We are aware of a potential competitor, Nektar Therapeutics, or Nektar, which
is developing a suite of new chemical entities with modified pharmacokinetic
profiles through the pegylation of known therapeutic agents. For instance,
Nektar’s product candidate is a pegylated version of irinotecan that is being
assessed in a variety of cancers, including a Phase III clinical trial in
metastatic breast cancer and two Phase II clinical trials in metastatic
colorectal cancer and platinum resistant ovarian cancer. In addition,
Merrimack Pharmaceuticals, Inc., or Merrimack, is developing a new formulation
of irinotecan for application in pancreatic cancer. Having completed a
Phase II clinical trial in May 2011, Merrimack recently initiated a Phase III
clinical trial for the same indication. Merrimack also has a Phase II clinical
trial and two Phase I clinical trials in oncology indications ongoing.
Companies working on cancer stem cells include Boston Biomedical, Inc.
(acquired by Dainippon Sumitomo Pharma Co., Ltd.), OncoMed Pharmaceuticals,
Inc., Stemline Therapeutics, Inc. and Verastem, Inc.
The VAST technology is a chemistry platform that provides innovative pyranose
compounds for drug discovery, with competition anticipated from other drug
discovery companies with novel chemistries. For instance, we are aware of
companies, including Ensemble Therapeutics, Summit PLC and Tranzyme Pharma,
that all have innovative chemistry platforms. Summit PLC has a small
carbohydrate library based on imino sugar scaffolds which offer unique
activities predominantly in carbohydrate modification pathways. Ensemble
Therapeutics and Tranzyme Pharma use macrocyclic technology to position
functionality on larger molecules accessing new chemical space between small
molecules, such as VAST compounds, and biologics, such as antibodies. Other
competitors include companies with an interest in cancer stem cells, mentioned
above, and other HA-based companies.
Company Description
We are a late stage biopharmaceutical company primarily focused on utilizing
our Hyaluronic Acid Chemotransport Technology, or HyACT, to target cancer
drugs preferentially to tumor cells to enhance drug activity. HyACT is a
flexible platform technology designed to increase the effectiveness of
anti-cancer agents without increasing treatment toxicity. We seek to reduce
the risks related to drug development by using known anti-cancer drugs, and
aim to enhance their commercial value by improving their effectiveness.
Our lead HyACT product candidate, HA-Irinotecan, is currently in a pivotal
Phase III clinical trial for metastatic colorectal cancer, or mCRC, meaning
that we intend to use the data we collect from the clinical trial to seek
regulatory approval from the U.S. Food and Drug Administration, or FDA, and
the European Medicines Agency, or EMA, of HA-Irinotecan for the treatment of
mCRC. HA-Irinotecan is also in an investigator-sponsored Phase II clinical
trial for the treatment of small cell lung cancer, or SCLC. We also have two
other HyACT product candidates that have successfully completed Phase I
clinical trials. In addition to our current clinical-stage product candidates,
we aim to develop a pipeline of product candidates by exploiting our
significant know-how in cancer stem cell biology and cancer metabolism
combined with the Versatile Assembly on Stable Templates, or VAST, small
molecule drug discovery technology that we have in-licensed.
Each of our current product candidates combines HyACT with a known anti-cancer
drug. HyACT uses hyaluronic acid, or HA, which delivers additional drug to the
tumor and promotes uptake of the drug into the tumor cells. HyACT binds to the
activated receptor CD44, a naturally occurring HA receptor, which has been
shown in numerous studies to be present in high levels in many prevalent solid
tumor cancer types but, more importantly, is generally not activated in
healthy tissue. CD44 over-expression is associated with more aggressive,
metastatic tumors and is also a marker for treatment-resistant cancer stem
cells. “Cancer stem cells,” sometimes referred to as tumor-initiating cells,
is a term used to describe a small subset of cells within the tumor that,
although not actual stem cells, demonstrate stem cell-like characteristics.
Cancer stem cells are generally more resistant to current chemotherapy
regimens than cancer cells, and their persistence after therapy is thought to
be one of the key reasons for disease progression and treatment failure. We
believe, based on preclinical studies, that the CD44 receptor-based mechanism
has the potential for improving the effectiveness of drugs combining HyACT
with an anti-cancer drug, which we refer to as HyACT-targeted drugs. In
preclinical studies, HyACT-targeted drugs delivered at least double the
dose of anti-cancer drug to the tumor when compared with the drug alone. Our
in vitro studies have shown that HyACT significantly increases drug uptake
into cancer cells. Finally, preclinical studies have also shown HyACT-targeted
chemotherapies are more potent than the original drug at killing cancer stem
cells and other CD44-expressing cells.
Despite the considerable research and development efforts of the
pharmaceutical industry, cancer remains a significant unmet medical need.
Chemotherapeutics remain the backbone of many drug-based anti-cancer treatment
regimens. Due to the non-specific nature of current chemotherapeutics, they
are typically administered at the maximum tolerated dose, not at the optimal
dose required to kill the cancer. As evidenced by the current recurrence and
mortality rates associated with cancers, there remains a need to identify new
and more effective anti-cancer treatments.
We believe that HyACT is a broadly applicable platform technology that has the
potential for enhancing the efficacy of a range of anti-cancer drugs in a
number of different cancer indications. In addition to HA-Irinotecan’s
Phase II clinical trial data, HyACT-targeted 5-fluorouracil and HyACT-targeted
doxorubicin have both demonstrated tolerability and a trend towards efficacy
in Phase I / IIa clinical trials. In preclinical studies, we have also had
promising results combining HyACT with seven other anti-cancer agents,
including other chemotherapies and monoclonal antibodies.
We have considerable know-how, research and preclinical expertise in HA,
cancer metabolism, CD44 and cancer stem cells. We have also in-licensed rights
to Alchemia Limited’s VAST small molecule drug discovery technology, which
provides innovative pyranose compounds for drug discovery. Our strategy is to
use these capabilities to investigate new pathways relating to CD44 signaling,
HA metabolism and pro-oncogenic pathways that we believe are important to the
promotion and proliferation of cancer stem cells. We aim to generate future
drugs designed to more effectively target and kill cancer and cancer stem
cells.
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Audeo Oncology, Inc., or Audeo Oncology, the issuer of the common stock to be
sold in this offering, was incorporated in Delaware in June 2012 and acquired
by Alchemia Limited as a wholly-owned subsidiary.
Our principal executive offices are located at 100 Pine Street, Suite 2040,
San Francisco, California 94111, and our telephone number is (415) 984-0300.
Our website is www.audeooncology.com.