Pharma, BioPharma

Biotech IPO wave rolls on as Werewolf, Vaccitech raise $230M for clinical trials

Vaccitech and Werewolf Therapeutics joined the public markets, raising a combined $230 million. The vaccine developer and the cancer immunotherapy biotech will apply the IPO proceeds toward clinical development of their respective pipelines.

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Two more biotech companies are joining the public markets. Werewolf Therapeutics and Vaccitech priced their respective IPOs late Thursday, raising a combined $230 million for multiple clinical trials.

Werewolf was able to boost the size of its deal, selling 7.5 million shares, up from the 6.25 million shares that it had initially planned to offer. Those shares were priced at $16 each, right at the midpoint of the biotech’s projected price range, and the company was able to gross $120 million. Werewolf’s shares will trade on the Nasdaq under the stock symbol “HOWL.”

Cambridge, Massachusetts-based Werewolf is developing cancer immunotherapies that circulate systemically throughout the body but activate an immune response only at the site of the tumor, sparing healthy tissue from the treatment’s effects. The company is developing engineered versions of interleukin-2 and interleukin-12. These cytokines are signaling proteins that prompt an immune response to cancer. But the effect of these signaling proteins can also extend to healthy tissue, and this toxicity has limited their use.

Werewolf uses protein engineering to overcome the toxicity limitations. In the  IPO prospectus, the company said that its proprietary technology, called Predator, creates molecules that have four parts, each with a different function. In addition to the cytokine itself, Werewolf’s drugs have an inactivation domain that physically blocks the cytokine portion of the molecule as it circulates throughout the body, preventing it from binding to anything until it reaches the tumor. Another domain of the molecule extends the therapy’s half-life, overcoming the short half-lives of cytokines. The fourth part of the molecule is a protease linker that does not come off until it reaches a tumor. Enzymes found in the tumor microenvironment trigger the linker to cleave the cytokine away from the other two domains of the molecule, unleashing it to do its work.

Lead Werewolf product candidate WTX-124 is a version of IL-2 in development for treating tumors known to respond to that cytokine and another type of immunotherapy called a checkpoint inhibitor. These cancers include melanoma, renal cell carcinoma, and non-small cell lung cancer.

“These are aggressive tumor types and many patients will eventually progress following treatment with standard of care,” Werewolf said in the IPO filing. “As a result, we believe there is a need for new therapies to improve response and durability. If successfully developed and approved, we believe WTX-124 represents a promising therapeutic option for patients with life-threatening diseases with high unmet medical need, either as monotherapy or in combination with immune checkpoint inhibitors or current or potential future standard of care agents.”

A second program, and WTX-330, is designed to improve on the properties of another cytokine, IL-12. In animal testing, Werewolf said that it observed a high level of anti-tumor activity against a broad range of preclinical tumor models.

Werewolf isn’t the only company trying to engineer better, more targeted interleukin immunotherapies for cancer. Xilio Therapeutics is taking a similar approach to IL-2 with molecules engineered with a mask that keeps the molecule from binding to anything until enzymes in the tumor microenvironment cut away that blocking domain. In February, the Waltham, Massachusetts-based biotech raised $95 million in Series C financing. Synthorx’s IL-2 research led to a $2.5 billion acquisition by Sanofi in 2019. Last month, South San Francisco-based Asher Bio emerged from stealth with $55 million in Series A funding and a proprietary technology that makes its IL-2 drugs more targeted.

Werewolf was founded in 2017 by Daniel Hicklin, an executive partner at MPM Capital, the venture capital firm that provided the startup with its initial financing. The biotech kept a low profile until 2019, when it unveiled a $56 million Series A round of financing and named Hicklin its president and CEO. According to the IPO filing, the company has raised more than $127 million since its inception, most recently a $72.1 million Series B financing announced early this year. MPM Capital is the company’s largest shareholder with a nearly 16% post-IPO stake, the filing shows. UBS Oncology and RA Capital Management each hold more than 8% of the company.

As of the end of 2020, Werewolf reported having access to $92.6 million in cash. Those funds, along with the IPO proceeds, will be deployed across the biotech’s pipeline. According to the filing, Werewolf plans to spend about $54.2 million to develop WTX-124 and $57.7 million for WTX-330. The company plans to advance each molecule through dose escalation studies and expansion studies as monotherapies or in combination with a checkpoint inhibitor.

Another $12.1 million of the IPO cash is set aside for preclinical development of a different program, WTX-613. The company also said that it may use its cash to in-license or acquire other assets, though it does not currently have any plans to do so. The company projects its IPO cash and existing capital will support the company for the next two years. It will not, however, be sufficient to complete clinical development of any of its product candidates, the company said in its filing.

Meanwhile, Vaccitech raised $110.5 million to continue its development of new vaccines for infectious diseases and cancer. The clinical-stage company offered 6.5 million American depositary shares for $17 each, which was the midpoint of its planned price range. Vaccitech’s shares will trade on the Nasdaq under the stock symbol “VACC.”

Oxford, U.K.-based Vaccitech has a pipeline of vaccine candidates but it might be best known for just one: the Covid-19 vaccine it co-invented, whose rights were licensed to AstraZeneca. That vaccine research originated at the University of Oxford’s Jenner Institute, the vaccine research center that also birthed Vaccitech in 2016.

The AstraZeneca Covid-19 vaccine, named Vaxzevria, and Vaccitech’s candidates employ the same technology: a weakened adenovirus that ferries into cells the genetic material for producing an antigen that prompts an immune system response. Adenovirus causes the common cold but Vaccitech uses a version that infects chimpanzees in order to avoid any pre-existing immunity people might have to human adenoviruses. These viruses are modified so that they do not replicate, and therefore cannot cause infection.

The adenoviruses that Vaccitech uses are engineered with greater capacity, enabling them to carry large antigens or multiple antigens that address different pathogen targets. In cancer, this extra capacity could reduce the risk of tumor escape, which are ways that cancer cells evade detection by the immune system, Vaccitech said in the IPO filing. In infectious disease, larger capacity may enable the company to target multiple pathogen strains, broadening the number of people that could benefit.

Prior to going public, the prospectus shows Vaccitech had raised about $257 million, most recently a $168 million Series B financing in March. Vaccitech’s largest shareholder is Oxford Sciences Innovation, which owns 23.9% of the company after the IPO, according to the prospectus. Prudential Credit Opportunities holds a 10.4% post-IPO stake; GV owns nearly 5%.

Vaccitech plans to spread the IPO proceeds across its vaccine pipeline. About $40 million of the IPO proceeds will be used to develop VTP-300 for hepatitis B virus, including completion of a Phase 1/2a study already underway as well as a planned Phase 2b clinical trial. Another $30 million is planned for VTP-200, which is currently in Phase 1/2 testing for human papillomavirus. The company plans to complete that clinical trial and start additional expansion studies.

In cancer, Vaccitech plans to spend $20 million to advance VTP-850 into Phase 1/2 testing in prostate cancer. Another $10 million is set aside for programs that have some funding from partners. VTP-400 is in preclinical development for preventing herpes zoster under a partnership with CanSino Biologics. A partnership with Johnson & Johnson and the Coalition for Epidemic Preparedness Innovations is in early-clinical development with VTP-500, a prophylactic vaccine candidate for Middle East respiratory syndrome.

Photo: Angela Weiss/AFP, via Getty Images

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