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Ikaria, Developer of the Hutch’s Hibernation-on-Demand Concept, Seeks $200M IPO

Xconomy Seattle — 

Ikaria, the developer of a drug to induce hibernation on demand like something from a science fiction novel, is attempting to raise $200 million through an initial public offering to help it achieve its goal.

Ikaria is headquartered in Clinton, NJ, but its R&D base is in Seattle, close to the lab of Mark Roth at the Fred Hutchinson Cancer Research Center, where pioneering work on the hibernation-on-demand concept was done. One of the company’s directors is Bob Nelsen of the Seattle office of Arch Venture Partners, which has a 10.1 percent ownership in the company, according to its IPO prospectus filed with the Securities and Exchange Commission.

The offering is sure to generate a lot of attention if Ikaria goes through with the plan. Ikaria’s underwriters are Goldman Sachs, Morgan Stanley, Credit Suisse, Lazard Capital Markets, Wedbush PacGrow Life Sciences, and Cowen & Co. Unlike most biotech companies that spend years in the product development stage burning cash, Ikaria generated $274 million in revenue and turned a $13 million profit last year. The company makes almost all its money today on what it calls INOtherapy, particularly a nitric oxide drug called Inomax. The treatment is the only FDA-approved therapy FDA for hypoxic respiratory failure in infants, which is a potentially deadly condition sometimes called “blue baby” syndrome.

While the existing drugs provide a stable financial base, you can be sure investors will start hearing a lot about what Ikaria has in the pipeline, namely a drug called IK-1001. This is a sodium sulfide compound that Ikaria has been testing in clinical trials to build on Roth’s concept of inducing hibernation-on-demand. As we described in a September 2008 feature, this is the big idea that if you can slow down breathing, heartbeat, and other metabolic functions without going too far and suffocating people, you might buy time for a surgeon trying to save someone before he or she bleeds to death.

Mark Roth

Mark Roth

Nelsen, in that story, went so far as to say that Ikaria “will probably be the biggest biotech IPO ever when it decides to go public.” A year later, former Merck executive Ben Shapiro and Arch’s Steven Gillis said at an Xconomy event that they both think Ikaria is the local company with the greatest potential to produce another blockbuster drug like Immunex’s etanercept (Enbrel) from the 1990s.

The company obtained an exclusive worldwide license to the hibernation technology from the Hutch in April 2005, a deal that requires the biotech to achieve certain milestones to show it’s diligently trying to develop the drug. If Ikaria hits all the goals, it will owe the Hutch $6.7 million in payments, and a “single digit percentage” royalty on sales if it can develop a marketable product, according to the filing. The company leases 8,000 square feet of office space for its R&D operations in Seattle, according to the filing.

Ikaria has got some deep pockets lined up behind it with a lot to gain in the IPO. New Mountain Investments and related entities control a majority 51 percent stake in the company, Linde has 17 percent, Arch has 10 percent, and Venrock Associates is the last major holder with another 10 percent, according to the filing. In what looks like an IPO-prep move, Ikaria enlisted a new director last month in Howard Pien, who was CEO of Medarex before that company was acquired last year by Bristol-Myers Squibb for $2.1 billion.

Interestingly, the Ikaria prospectus doesn’t really say much about the prospects for IK-1001. But it is thought to act as an anti-oxidant or an anti-inflammatory drug. “While the reasons for these biologic effects are not completely understood, they have been demonstrated in several animal models,” Ikaria said.in the filing

Given what the company has seen in animal tests, Ikaria is looking at IK-1001 for single-use emergency medicine situations in which people are suffering tissue ischemia, like when blood is cut off to an organ, as in a stroke. The drug might be useful in a number of ways, including heart bypass surgery or diabetic ulcers. The lead indication is to prevent tissue damage that occurs when blood flow is restored following a heart attack, the company said.

It sounds like the concept for the drug is still very much a work in progress, at least based on the filing. About 170 patients have enrolled in three separate clinical trials, with about 80 percent of them on the drug and the rest on placebo. Ikaria has tried a fast one-minute IV dose, and more steady doses for as long as six hours. Most adverse events in the trials were mild-to-moderate and resolved themselves, the company said. Ikaria started a mid-stage clinical trial of the drug for coronary artery bypass surgery, but cancelled the study when it decided it needed a “rapid and reliable assay methodology for IK-1001.” The company plans to re-start the trial to get some data on effectiveness once it has developed the assay.

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