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Retooled Selecta Bio Takes Crossover Cash to IPO Queue

Xconomy Boston — 

Selecta Biosciences became a candidate to go public when a group of crossover investors—institutions that back both public and private companies—piled $38 million into the company in September. Nine months later, the Watertown, MA-based company is ready to take the leap.

Selecta filed papers with the Securities and Exchange Commission late Tuesday outlining plans for an IPO. If successful, the company would trade on the Nasdaq under the ticker symbol “SELB.”

Public investors have had a discerning attitude toward biotech IPO candidates this year, a big change from the raging bull market of 2013 to 2015, when several biotechs without a shred of human data were given big valuations right out of the gate.

This year, gene editing startups Editas Medicine (NASDAQ: EDIT) and Intellia Therapeutics (NASDAQ: NTLA), have pulled off lucrative IPOs and boosted their market value without any clinical evidence their cutting-edge science works in people. But many others, including Viamet, Aeglea BioTherapeutics, and Spring Bank Pharmaceuticals, have had to either lower their projections or postpone their IPOs altogether.

Selecta hopes that a strategic shift will win investors over. The company is older than other biotechs to hold successful IPOs this year. Editas and Intellia, for instance, were formed in 2013 and 2014, respectively, while Selecta emerged from the work of MIT professor Bob Langer and physician-scientists Omid Farokhzad and Ulrich von Andrian, both of Harvard Medical School, back in 2008.

But Selecta CEO Werner Cautreels told Xconomy last year that it took some “maturation” to figure out exactly how to best use the company’s technology: a method of producing biodegradable, polymer nanoparticles that can, for instance, be custom-built to have the same shape and size of specific viruses.

Selecta first wanted to use that technology to make vaccines. But it’s now using the technology to tell a patient’s immune system to call off an unwanted attack on a particular target—creating what’s called “antigen-specific tolerance.”

Selecta is trying to apply this potential benefit in different ways, like warding off the immune response against biologic drugs and gene therapies. It’s working with Sanofi, for instance, to develop therapies for celiac disease, Type 1 diabetes, and an unspecified “life threatening food allergy.” In its IPO prospectus, Selecta says it intends to develop gene therapies in-house as well.

Like several biotechs gone public before it, Selecta doesn’t have much clinical data. The first test is a slate of trials testing a gout drug prospect known as SEL-212.

With SEL-212, Selecta aims to one-up pegloticase (Krystexxa), a gout drug originally developed by Savient Pharmaceuticals several years ago. In its prospectus, Selecta says pegloticase’s commercial problems—Savient went bankrupt in 2013 because of a disappointing launch—stem from immune reactions that limit its use. Selecta is trying to show that SEL-212 is just as effective, but without those issues. It will wrap up two Phase 1 studies and start a mid-stage trial of SEL-212 later this year. (Pegloticase, meanwhile, is now owned by Dublin-based Horizon Pharma (NASDAQ: HZNP).

Polaris Partners is Selecta’s largest shareholder, with a 14.3 percent stake. Other big stockholders are Flagship Ventures (13.5 percent), Rusnano (10.9 percent), OrbiMed Advisors (9.3 percent), entities associated with Harvard professor Timothy Springer (7.7 percent), and NanoDimension (5.3 percent). The company has raised $118.5 million in venture financing since inception.