When a life sciences company operates in the public markets with a stock offering of up to nine digits, the odds are that the capital is destined for manufacturing. And so is Evotec, a decades-old biotech industry player that has recently added new manufacturing capabilities. The company aims to expand its biologics manufacturing sites in the United States and Europe, and its Nasdaq debut raised $ 435 million to support those plans.
Evotec may be new to many US investors, but it’s not a newcomer to the public markets. The Hamburg, Germany-based company has been listed on the Frankfurt Stock Exchange since 1999 under the symbol “EVT”. The company’s shares began trading Thursday on the Nasdaq under the ticker symbol “EVO”. Evotec offered 20 million US custodian shares for $ 21.75 each. That’s 2 million shares less than he had planned to offer for about $ 26.16 a piece. Evotec’s closing price on Friday was $ 22.55.
In its prospectus, Evotec said that the growing understanding of the molecular and genetic foundations of disease drives the need for advanced technologies capable of interpreting and translating the large amount of data generated. The company has developed such technologies, including computer software that identifies biomarkers and analyzes how a drug works. Evotec’s artificial intelligence and machine learning capabilities generate and analyze data, providing insights and predictions about the efficacy of a drug candidate. The company’s business has provided these technologies to biopharmaceutical companies that discover and develop drugs. In this respect, Evotec is a service provider, but its relationship with companies is not always strictly seller.
Evotec generates revenue in several ways. The company may offer its offerings under a fee-for-service model, similar to the relationships many contract research organizations have with pharmaceutical companies. In these cases, the biopharmaceutical company owns all rights to its drug (s). However, in other cases, Evotec also forms partnerships in which the risk of drug development is shared. Evotec provides its technology and services in exchange for milestone payments as programs progress, as well as potential royalties on sales of marketed products.
According to the filing, Evotec has participated in 11 disclosed pipeline programs currently in clinical testing and more than 100 programs in discovery or preclinical development. Evotec also invests in products or companies with the potential to generate returns in the future as these companies go public or are acquired. The record indicates that as of June 30, the company’s equity investments covered 90 active projects.
Although Evotec has been in business since 1993, it has experienced significant growth in recent years. The turnover in 2020 amounted to 500.9 million euros, an increase of 12.2% compared to the previous year. In the first half of this year, Evotec achieved a turnover of 271.3 million euros, an increase of 17.5% compared to the same period last year. This growth has been accompanied by an increase in the number of customers. Evotec said its customer count in 2020 was 829 compared to 769 in 2019. The three biggest – Bristol Myers Squibb, Merck and Sanofi – accounted for 24% of Evotec’s 2020 revenue, according to the filing. That’s down from 30% in 2019, but the company attributed the drop to revenue growth from other customers. Higher earnings growth is expected from manufacturing services, and that’s one of the drivers for this week’s US equity offering.
In 2019, Evotec acquired Just Biotherapeutics, a Seattle-based company that applies AI and machine learning capabilities to the discovery and development of biologic drug candidates. Just Bio has a manufacturing facility in Redmond, Wash., Which opened in August. This site, called J.POD, has a manufacturing agreement with the US Department of Defense covering the production of monoclonal antibodies for Covid-19. The Redmond plant also counts Merck as a partner in the pharmaceutical industry. Another manufacturing site in Toulouse, France, was acquired from Sanofi last year. There, Evotec plans to build a second J.POD facility on the acquired land.
Evotec said in the prospectus that approximately $ 100 million of the proceeds from the sale of shares will go towards the expansion of the Redmond site. Another $ 175 million is set aside to build additional organic manufacturing capacity in Toulouse. Evotec also plans to invest in its technologies. Approximately $ 35 million is earmarked for the company’s precision medicine platform, including the expansion of its induced pluripotent stem cell technology platform, expanding access to patient-derived samples and relevant data on the disease, as well as the ability to analyze this data.
Although Evotec has been a partner of pharmaceutical companies, the company has its own drug pipeline without a partnership. Evotec plans to spend $ 115 million to accelerate development of these drugs and add more to the pipeline. The company said these drugs could end up in the hands of partners in the pharmaceutical industry.
Evotec’s business model is profitable. The company expects net profit for the nine months ending September 30 to be between 245 and 249 million euros, compared to 5.8 million euros in the same period last year. The company attributed much of the increase to gains from its investment in artificial intelligence biotechnology Exscientia, a partner of Evotec which completed its IPO last month.
IO Biotech IPO Raises $ 100 Million for New Twist in Cancer Immunotherapy
IO Biotech, a clinical-stage company that develops peptide-based drugs to fight cancer, raised $ 100 million when it debuted on the stock market. The Copenhagen, Denmark-based company valued its 7.15 million share offering at $ 14 apiece, which was the low end of its projected price range. The company previously set a goal of selling 6.5 million shares at between $ 14 and $ 17 per share. Shares of IO began trading on the Nasdaq on Friday under the ticker symbol “IOBT”.
IO was formed in 2014, derived from the National Cancer Immune Therapy Center at Herlev University Hospital in Denmark. The company calls its technology platform “T-win”. IO drugs are intended to activate natural T cells to target mechanisms that suppress immune responses. The company said in its IPO that T-win drugs offer a dual approach. First, they kill tumor cells and cells in the tumor microenvironment that express immunosuppressive proteins. The second mechanism is the ability to modulate the tumor microenvironment to make it a more pro-inflammatory and anti-tumor place.
“Our T-win technology is based on our team’s deep understanding of both the [tumor microenvironment] and the ability of a tumor to escape surveillance and destruction by the immune system, ”IO said in the IPO filing. “Our approach contrasts with previous methods which sought either to block unique immunosuppressive pathways or to direct the immune system against specific identified antigens expressed by tumor cells. “
IO’s lead drug candidate, IO102-IO103, is designed to target the immunosuppressive mechanisms of two proteins, IDO and PD-L1. In Phase 1/2 testing in patients with advanced melanoma, IO said the results showed “significant” tumor regression and a long-lasting anti-tumor response. Tolerance of therapy was also manageable in the study of 30 patients. The overall response rate was 73%; the complete response rate was 47%. The company now plans to advance IO102-IO103 in a pivotal Phase 3 clinical trial that will evaluate the therapy in combination with Merck’s anti-cancer drug, pembrolizumab (Keytruda). This trial, targeting the recruitment of 300 patients, is expected to begin by the end of this year, according to the file.
IO is preparing to evaluate its flagship drug as a first-line treatment in other types of solid tumors. These tests will take place in the form of a collective trial, in which the study drug is tested against several different cancers that all have the same biological or genetic signature. Cancers that will be covered in the planned basket study include non-small cell lung cancer, squamous cell carcinoma of the head and neck, and urothelial bladder cancer. In addition to evaluating the therapy as a first-line treatment, the company also plans to test it before surgery, as a neoadjuvant, which is a first step in trying to shrink tumors before surgery. IO also plans to test it as an adjuvant therapy, a post-surgical treatment to reduce the chances of the cancer coming back.
IO’s main shareholder is Lundbeckfond Invest, which has a 14.2% stake after the IPO, according to the filing. Novo Holdings owns 10.8% of the company after the IPO. As of September 30, IO said it had $ 45.4 million in cash. An additional $ 84.1 million was paid to the company last month as part of an investment deal the company struck earlier this year. In the prospectus, IO said it plans to deploy around $ 50 million for the Phase 3 testing of its leading therapeutic candidate. An additional $ 20 million will be spent on the development of this therapy in a planned Phase 2 basket trial. Another program, IO112, is expected to receive $ 10 million for a phase 1/2 trial in combination with IO102 and IO103.
Photo: Krisztian Bocsi / Bloomberg, via Getty Images