What’s it worth to add a little deuterium to drugs to boost their abilities? In Wall Street’s eyes, about $14 per share.
Lexington, MA-based Concert Pharmaceuticals will debut on the Nasdaq today after pricing its IPO at the top of its projected range of $14 per share. The company sold 6 million shares in the deal, up from the 5 million it originally planned to offer, and raised $84 million before discounts due to underwriters. Concert priced at the high end of its projected $12 to $14 per share range. It will trade under the ticker symbol “CNCE.”
UBS Securities, JMP Securities, Roth Capital Partners, and Wells Fargo Securities underwrote the IPO. They have a 30-day option to buy up to 900,000 more shares at the IPO price.
With a 12.8 percent stake, Three Arch Partners was Concert’s biggest stockholder before the IPO. TVM Capital (12.4 percent), GlaxoSmithKline (11.8 percent), Brookside Capital Partners Fund (10.2 percent), Skyline Ventures (9.4 percent), Fidelity Investments (6.6 percent), Greylock Partners (6.3 percent), and Flagship Ventures (5.9 percent) also held significant stakes.
Concert’s hook is its use of deuterium, an isotope of hydrogen found in sea water. Concert takes existing drugs already proven to be safe and selectively swaps some of the hydrogen atoms within them with deuterium atoms, changing how they are metabolized in the body. The idea is that this is supposed to make drugs that are more potent, or have fewer side effects or drug-drug interactions.
Concert has parlayed that concept into several partnerships with pharmaceutical companies. GlaxoSmithKline, Avanir Pharmaceuticals (NASDAQ: AVNR), Jazz Pharmaceuticals (NASDAQ: JAZZ), and most recently Celgene (NASDAQ: CELG) have all cut deals with Concert since 2009, though the GlaxoSmithKline deal didn’t pan out. Avanir, for instance, agreed to pay as much as $200 million for a license to use Concert’s technology to boost its drug for pseudobulbar affect, a condition that causes outbursts of crying or laughing. Jazz promised more than $120 million to Concert if it could soup up its narcolepsy drug, sodium oxybate (Xyrem). Those two deals have resulted in the drug candidates AVP-786 and JZP-386.
Celgene, meanwhile, could pay Concert as much as $300 million per drug in various milestone payments through a broader deal if things break right. The first drug candidate to come from that partnership is CTP-730, a treatment for inflammatory diseases.
Those partnerships have enabled Concert, which was founded in 2006, to avoid any dilutive financing since 2008, and also begin developing its own drug candidates: CTP-499, for diabetic kidney damage, and CTP-354, for spasticity associated with multiple sclerosis and spinal cord injury. All told, the company has received about $106 million in equity financing, upfront and milestone payments, and research and development funding since its inception, according to its IPO prospectus.
Still, Concert has a lot of data to accrue to prove its deuterium thesis, hence the IPO. The company expects to have up to five drug candidates in clinical trials by the end of the year, with at least two of them in Phase II studies, and will use the IPO cash to bankroll the effort. The most advanced drug of the group is CTP-499, which is in a mid-stage trial that’s expected to produce top-line data in the first half of this year.