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Retooled Catabasis Cuts Price, Upsizes to Grab $60M in IPO

Xconomy Boston — 

Catabasis Pharmaceuticals has done some strategic tinkering over the past few years, and the Cambridge, MA-based company did a bit more maneuvering on Wednesday to price its IPO.

Catabasis is set to debut on the Nasdaq this morning after raising $60 million in an IPO. It had to sell more shares at a lower price than planned to get there, however: Catabasis sold 5 million shares at $12 apiece, coming in just short of the 4.3 million at $13 to $15 apiece it had projected. Shares will begin trading today under the ticker symbol “CATB.”

The cash is going towards some early stage trials Catabasis is running for experimental drugs for Duchenne Muscular Dystrophy and high cholesterol levels, respectively. Catabasis just started the first of those trials—a Phase 1/2 study of a prospective Duchenne treatment called CAT-1004—last week.

Catabasis was formed in 2008 and built around a technology called  “SMART-Linker” used to attach two compounds together. That resulting combination forms a new chemical entity meant to hit two targets in a disease pathway at once. Its most advanced drug prospect, for instance, CAT-2003, is a chemically linked combination of niacin and the omega 3 fatty acid eicosapentaeonic acid, or EHA; CAT-1004, links a different fatty acid, docosahexaeonic acid (DHA), to salicylate.

While CAT-2003 is further along than CAT-1004 in clinical trials (see below for more), Catabasis has clearly prioritized the Duchenne program first—part of a strategic shuffling the company has done to find the best path forward for its technology. CAT-1004, for instance, was first thought to be a potential treatment for type 2 diabetes and later inflammatory bowel disease before its potential for Duchenne came to the fore—it’s meant to tamp down the inflammation associated with the crippling, muscle-wasting disorder and regenerate muscle tissue.

Then there’s a newer drug called CAT-2054, a next-gen version of CAT-2003. Catabasis has said that though CAT-2003 has completed three Phase 2a studies for high cholesterol, and that data “support the utility” of the drug’s technology, it’ll only move the drug forward for other serious diseases—like liver cancer—and only with the help of a partner. CAT-2054, meanwhile, began early-stage testing for patients with high cholesterol who don’t respond to other treatments, in January. Initial data from that study were released in early June; full results are expected in the third quarter. (Catabasis used a different chemical linker for CAT-2054; it’s distributed through the body differently than its predecessor, according to the IPO prospectus)

With a 25.8 percent stake, SV Life Sciences is Catabasis’s largest shareholder. Others include Clarus Lifesciences II (24.9 percent), MedImmune Ventures (14.8 percent), Advanced Technology Ventures VIII (10.3 percent), and Lightstone Ventures (6.8 percent). The company has raised about $93 million in venture cash and $10 million in debt since it started up seven years ago.

Citigroup, Cowen and Co., Wedbush, and Oppenheimer & Co. are underwriting the IPO.