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Voyager Charts an IPO Course Amid Choppy Biotech Waters

Xconomy Boston — 

The recent downturn has made it a little tougher these days for biotechs to go public on the terms they want. Whether that speaks to an emerging trend remains to be seen, but a good litmus test is coming—a startup with a syndicate of “crossover” investors, a big partnership, and an experienced management team. The company: gene therapy startup Voyager Therapeutics.

That Cambridge, MA-based Voyager filed a prospectus for an IPO on Friday isn’t surprising. The company raised a $60 million Series B round in April from a large group of investors that typically invest in public companies, a telltale sign that Voyager was amassing a syndicate that could support a future IPO.

But going public might be a bit harder for Voyager now than it envisioned when it brought those investors aboard. Drug pricing has become a hot topic in Washington over the past month, leading to a broad sell-off in biotech stocks that has even started to impact the companies lining up to go public.

There are two ways to look at this. On one hand, biotechs like Edge Therapeutics (NASDAQ: EDGE), Mirna Therapeutics (NASDAQ: MIRN), and CytomX Therapeutics (NASDAQ: CTMX) were all able to weather the storm and complete IPOs. On the other, all of these companies had to compromise by selling more shares at a discount to complete their deals.

Now here comes Voyager, which, like another recent IPO prospect—MyoKardia—is a startup founded by Third Rock Ventures, a Boston venture firm at least partly responsible for a slew of biotechs that went public during the boom and took off. Some others: Agios Pharmaceuticals (NASDAQ: AGIO), Bluebird Bio (NASDAQ: BLUE), Sage Therapeutics (NASDAQ: SAGE), Global Blood Therapeutics (NASDAQ: GBT), and Blueprint Medicines (NASDAQ: BPMC). Third Rock holds a whopping 52.6 percent of Voyager and is by far its largest shareholder. (Others include Sanofi (11.2 percent), Fidelity Management & Research (7.5 percent), Brookside Capital Partners (5.6 percent), and Partners Investments (5.2 percent).)

Voyager is one of the companies formed amidst the recent comeback of gene therapy, a method of using viruses to deliver genetic instructions into the body to, say, produce a protein that might be lacking, or halt the production of a protein that might be toxic. Advances in delivery technology, combined with positive clinical data—such as the recent Phase 3 data from Spark Therapeutics (NASDAQ: ONCE)—have propelled gene therapy back into the limelight. A new crop of gene therapy companies has started up trying to capitalize on the advances, and many of them have either gone public (UniQure, Celladon, Spark, Avalanche Biotechnologies, RegenXBio) or are now trying to (Voyager, Dimension Therapeutics).

Voyager’s angle is that it’s using gene therapy to target a broad range of neurological disorders, using an in-house library of adeno-associated virus (AAV) vectors—a common tool for gene therapy delivery. It’s a tall order: No company has ever successfully delivered gene therapies to the brain or spine, the way Voyager intends to. And the risks of delivering a gene therapy directly to the brain or spine via a surgical procedure are formidable. Voyager noted, for instance, that in a past Phase 1 trial run by UCSF for its lead candidate—a therapy called VY-AADC01 for Parkinson’s disease patients who don’t respond to treatment with levodopa—three patients experienced hemorrhages from the brain surgery.

According to the prospectus, Voyager is using a different imaging system in its current trial, a Phase 1b study. But it still noted that one patient in the study suffered two serious side effects, including a blood clot in the lungs, that were again related to the surgery itself.

Nonetheless, Voyager has already got a stamp of validation from Sanofi subsidiary Genzyme, which formed a broad alliance with the company in February. Voyager got a $65 million check up front and a $35 million equity investment from Genzyme in that deal, and could get another $745 million in milestones if things break right.

Voyager is developing gene therapies for a “monogenic” form of amyotropic lateral sclerosis—meaning, a type believed to be caused by a single genetic mutation—as well as Parkinson’s, Friedreich’s ataxia, Huntington’s disease, and spinal muscular atrophy. But only the Parkinson’s therapy is in human testing—the Phase 1b trial is expected to produce data next year. (Genzyme can opt into non-U.S. rights to VY-AADC01.)

Voyager is headed by former Eli Lilly R&D chief and Third Rock venture partner Steven Paul (pictured above), who left Third Rock last year to run the company. It had about $169 million in cash on hand as of June 30, and would trade on the Nasdaq under the ticker symbol “VYGR” if it completes the IPO.

Cowen and Co., Piper Jaffray, Nomura Securities, and Wedbush Securities are Voyager’s underwriters.