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Nivalis Bets on Potential Cystic Fibrosis Drug, Seeks $60M IPO

Xconomy Boulder/Denver — 

Nivalis Therapeutics, a Boulder, CO-based drug company working on a treatment for cystic fibrosis, will attempt to go public soon with a potential $60 million initial public offering. The filing on Wednesday came one day after Vertex Pharmaceuticals (NASDAQ: VRTX) cleared a significant FDA hurdle for its latest CF drug, which Nivalis’s drug candidate relies on.

The filing is a first step in a long process, and Nivalis (known until February as N30 Pharmaceuticals) has not determined the amount of shares it will sell or its expected share price. The $60 million target could change once the company’s bankers begin courting potential investors. If it reaches the Nasdaq, Nivalis shares would trade under the symbol “NVLS.”

Cystic fibrosis affects an estimated 70,000 people worldwide and has no known cure. The inherited disease is caused by a defective gene, causes a steady buildup of thick mucus in the lungs, and leads to various health problems and often early death.

Nivalis’s drug candidate, N91115, is in Phase 1b clinical trials that are testing its safety and tolerability in CF patients. Nivalis believes it could be used in combination with Vertex’s two drugs, ivacaftor (Kalydeco) and Orkambi, a combination of ivacaftor and lumacaftor. If the trial is successful, Nivalis’s next step would be to test the safety and efficacy of the three drugs together. Nivalis believes N91115 would improve the efficacy of the combination therapy by stabilizing the protein it binds to.

Ivacaftor was approved by the FDA in 2012 and already is on the market, and on Tuesday an FDA panel recommended final approval for the lumacaftor/ivacaftor combination. Those drugs, like N91115, work by treating underlying genetic abnormalities present in certain CF patients. Final approval is expected to come by July 5.

Vertex has a lot riding on the success of the Orkambi combination therapy—see this story earlier this week from Xconomy’s Ben Fidler. One analyst estimates it could have annual sales of $5.5 billion.

But Nivalis also needs Orkambi to succeed. The eight-year-old biotech made clear in its filing that it is dependent on Vertex’s combination.

“We depend almost entirely on the success of our lead product candidate, N91115, which is currently in Phase 1b clinical testing,” the company said in the filing. “We have never obtained approval for or commercialized a product candidate.” It continued by noting its plans could be seriously derailed if Vertex encounters setbacks, either with regulators or once it starts trying to sell the lumacaftor/ivacaftor combination.

Nivalis also would be in jeopardy if a competitor came out with a drug that’s better than Orkambi, and a number of rivals have CF therapies in the works.

Despite its reliance on Vertex, Nivalis is acting independently.

“We have no agreements in place with Vertex, including any agreements to incentivize Vertex to obtain approval or proceed with its commercial launch of lumacaftor/ivacaftor, and our plans to develop N91115 have not been established in conjunction with Vertex,” it said.

Nivalis did not return a request for comment.

If Nivalis’s early strategy is successful, the company could test N9115 with the cystic fibrosis drugs other companies are developing, according to the filing.

Nivalis said in its prospectus it has been losing money every year, including $15 million in 2014, and has an accumulated deficit of $130.3 million.

In November, Nivalis raised a $30 million mezzanine financing round, which brought its total private fundraising to $115 million. Its investors include Wellington Management, RA Capital Management, Rock Springs Capital Management, Sabby Management, and Deerfield Management.