How A Kidney Drug Almost Torpedoed Concert Pharma’s IPO
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a byproduct of pentoxifylline, an old drug used to increase blood flow to the arms and legs that Tung says has been shown in the past to lower patients’ UACR levels. CTP-499 had also shown some protective effects on the kidneys in preclinical studies, making it appear an even safer bet as a lead drug, he says.
By the late spring of 2013, with partnerships in place and its mid-stage trial underway for CTP-499, Concert, like many other biotechs, was charging towards an IPO. The company began discussions with buy-side investors, was working with a team of bankers, and began drafting its IPO prospectus. “All systems were go,” Tung says.
But in August, on the verge of finalizing its documents, Concert got its 24-week results of CTP-499 earlier than expected, and they were alarmingly bad. The drug had showed no positive effects—“none, zero,” Tung says—on UACR. Executives were stunned. Concert realized with that blotch on its record it would have no shot to go public, and pulled the offering. Though it still had a reasonable amount of cash, Tung says, the company was probably going to need to raise more money one way or another within the next six months to a year—a raise it definitely didn’t want to attempt just coming off of a failed trial.
So Concert pivoted. It had just begun an early trial of a second wholly-owned drug in its pipeline, CTP-354, for spasticity associated with multiple sclerosis and spinal cord injury. Even though the program appeared riskier—unlike CTP-499, this drug candidate was based on a substance that hadn’t been tested in humans before—Tung’s idea was that if CTP-354 could show early signs that it could get into the central nervous system without the side effects that have bogged down similar prospective drugs, then Concert might be able to go public after all.
Luckily for Concert, according to Tung, CTP-354 gave Concert what it was looking for. The study, Tung says, showed that CTP-354 was reaching the right receptors in patients’ brains in “very high levels,” without side effects. Because of that, the drug—which “wasn’t on the radar” when Concert began meeting with investors—was now the centerpiece of Concert’s new IPO pitch.
All the while, despite the disastrous early findings, Concert kept the CTP-499 program going into the second 24-week testing period—even though there were some people within the company who wanted to kill it.
“This is not my first time around,” Tung says. “Every drug that I’ve worked on that’s made it to market has been near death one or more times, so as unpleasant, and frankly shocking, as that result was, when I looked at the data I just felt like there was enough there to warrant the investment.”
One thing Tung says he saw was new data from some of the patients in the study who had been on CTP-499 for longer periods of time—36 or 48 weeks—indicating that the drug might be beginning to slow the rate at which creatinine built up in the blood.
What’s more, Tung says that the widely held belief in industry that there is a correlation between UACR and kidney function was debunked recently in certain publications—after Concert already started its CTP-499 trial.
These combined factors gave Concert hope—and the ability to still pitch CTP-499 to investors, even if the drug was no longer its main attraction in the IPO.
“We were able to tell them, look, we have a failed primary endpoint on something that doesn’t measure really what Phase 3 is going to have to measure—it’s a surrogate of a surrogate if you will,” Tung says. “But the thing that is more important, the ability to affect kidney function, appears to be there with this compound.”
[Updated with IPO date, current stock price] So Concert, after months in limbo, finally jumped into the IPO queue in January. It had been able to keep its syndicate of investment banks together despite all the trouble, and filed its S-1, pitching CTP-354, its partnerships, and the maybe-not-dead-after-all CTP-499. Those, combined with a little bit of good timing—this was prior to the big biotech market correction that’s since dragged down a few IPOs—enabled the company to … Next Page »