BioPharma, Pharma

Erasca’s IPO leads the way as three cancer biotechs raise $534M for clinical trials

Cancer drug developer Erasca, whose mission is to “erase cancer,” has raised $300 million from its IPO. The clinical-stage biotech addresses a single elusive cancer target; it has multiple programs taking multiple approaches, two of them in human testing and the rest on track to join them. Cancer biotechs Imago BioSciences and TScan Therapeutics also priced IPOs.

Erasca, a biotech developing therapies designed to hit a notoriously difficult cancer target, now has $300 million in fresh cash to continue clinical development of its lead programs and bring a slate of additional drug candidates into human testing.

The San Diego-based company initially planned to offer 17.5 million shares in the range of $14 to $16 each. But Erasca was able to upsize the deal to 18.75 million shares offered at the top of the projected price range. On Friday, those shares began trading on the Nasdaq under the stock symbol “ERAS.” Erasca closed its first trading day at $17.43 per share, up nearly 9% from the IPO price.

The name Erasca is a portmanteau for “erase cancer,” which the company embraces as its mission, repeated numerous times throughout its IPO filing. Playfully, the company reveals that it refers to its employees as “Erascals.” But the company name also reveals its approach: “Eradicate RAS-driven CAancer,” founder and CEO Jonathan Lim wrote in a letter included in the prospectus.

RAS genes encode proteins that play a role in cell signaling, acting like an on/off switch that regulates cell growth. Mutations can keep the switch stuck in the “on” position. The result is unregulated cell growth that drives cancer. While RAS’s role in cancer is understood, drugging it has been difficult. Erasca is developing therapies that shut down the RAS gene and the MAPK pathway, which form one of the most frequently altered signaling pathways in cancer.

Of the company’s 11 pipeline programs, two have reached the clinic. ERAS-007 is in Phase 2 testing in patients whose solid tumors have been altered by RAS/MAPK, regardless of the type of tissue where the tumor developed. ERAS-601 is in Phase 1 testing in RAS/MAPK-altered tumors. Both are oral, small molecule drugs. But Erasca isn’t tied to a particular type of drug and while its singular focus is on shutting down RAS/MAPK, it says it can do so with small molecules, large molecules, or protein degrading drugs. Additional programs are making progress toward clinical trials.

“We expect to have four product candidates in the clinic within the next six quarters, plus an additional [investigational new drug application] filing every 12 to 18 months over the next five years,” Erasca said in the prospectus.

Though RAS has been tough to drug, it can no longer claim the mantle of being undruggable. In May, Amgen won FDA approval for Lumakras, a drug for non-small cell lung cancer (NSCLC) that targets a rare mutation of KRAS, part of the RAS family. But NSCLC has a tendency to spread to the brain, and this is one area where Erasca believes it can stand apart. In the IPO filing, Erasca cites animal tests of the approved Amgen drug and the experimental adagrasib, from Mirati Therapeutics, showing that those medicines did a poor job of penetrating into the central nervous system. Erasca says it is developing drugs that go after the same rare KRAS mutation and offer comparable or even better efficacy while also having the ability to cross the blood-brain barrier.

City Hill Ventures is Erasca’s largest shareholder, with a 10.3% post-IPO stake, according to the prospectus. ARCH Venture Partners owns 9.5% of the company after the IPO. Prior to going public, Erasca had raised a total of $320.4 million. As of the end of the first quarter of this year, the company reported having $217.3 million in cash. That cash, combined with the IPO proceeds, will be deployed across the Erasca pipeline.

According to the prospectus, the company plans to spend between $90 million and $100 million on a series of Phase 1b/2 tests of its lead drug candidate though the reporting of data in one or more of those studies. Another $45 million to $50 million will go toward development of ERAS-601 through the data readout of the ongoing Phase 1 clinical trial. The company has budgeted between $75 million to $90 million for ongoing discovery and development of the other RAS/MAPK drugs in the pipeline, potentially advancing one or more of them to human testing. The company estimates that it has enough money to fund operations for at least the next two years.

Imago’s IPO raises $134M, plus $20M more from Pfizer

Imago BioSciences raised $134.4 million to continue clinical development of its lead drug, which is being developed as a treatment for cancers of the bone marrow. The South San Francisco-based company planned to sell 7 million shares in the range of $14 to $16 each. Imago was able to boost the size of the deal, offering 8.4 million shares at the top of its targeted price range. Those shares are trading on the Nasdaq under the stock symbol “IMGO.”

Concurrent with the IPO, Pfizer has agreed to purchase $20 million worth of Imago shares at the IPO price, according to the prospectus.

Imago’s research focuses on small molecules that target lysine-specific demethylase 1 (LSD1), an enzyme key to the production of blood cells in the bone marrow. The Imago pipeline, so far, is one drug candidate, bomedemstat. That drug is being developed to treat several myeloproliferative neoplasms (MPNs), a family of chronic cancers affecting the bone marrow. The three most common of these disorders are myelofibrosis, essential thrombocythemia, and polycythemia vera. Phase 2 studies are underway evaluating bomedemstat in myelofibrosis and essential thrombocythemia.

Since Imago’s formation in 2012, the company has raised $164.8 million, according to the IPO filing. The company’s largest shareholder is Clarus Lifesciences, with a 10.5% post-IPO stake. Frazier Healthcare Partners and Omega Fund each hold a 9% stake in the company after the IPO.

At the end of the first quarter of this year, Imago reported a cash position of $82.7 million. With the cash on hand, the Pfizer investment, and the IPO proceeds, the company plans to apply $50 million toward clinical development of bomedemstat for essential thrombocythemia through the completion of both Phase 2 and Phase 3 clinical testing. Another $10 million is set aside for developing the drug in myelofibrosis through the completion of ongoing and planned Phase 2 testing. The capital will also be deployed for manufacturing of bomedemstat, development of the drug for other indications, and internal R&D.

With first clinical tests ahead, TScan’s IPO takes in $100M

TScan Therapeutics, a company that engineers T cells to produce its cancer immunotherapies, raised $100 million to advance its programs into their first tests in humans. The Waltham, Massachusetts-based biotech offered nearly 6.7 million shares for $15 each, which was the low end of its projected $15 to $17 per share price. TScan shares are trading on the Nasdaq under the stock symbol “TCRX.”

TScan analyzes the T cells of cancer patients who have had exceptional responses to immunotherapy. The biotech said in its IPO filing that its TargetScan technology learns the targets being recognized by T cell receptors (TCRs), providing the company with a TCR/target pair that can be made into a therapeutic candidate. A second technology called ReceptorScan identifies TCRs that are active against targets that have been previously identified and validated. The best TCR candidates identified by both technologies are added to TScan’s collection of TCRs called ImmunoBank.

A TScan therapy is made by obtaining white blood cells from either a patient or a healthy donor. At the company’s manufacturing facility, T cells are isolated and engineered using TCR sequences from ImmunoBank. Those cells are sent back to the hospital and infused into the patient. Those cells are expected to proliferate inside the patient, mounting an anti-tumor response.

TScan’s pipeline spans six programs in both liquid and solid tumors. The two most advanced programs are for liquid tumors. TSC-100 and TSC-101 are in development for acute myeloid leukemia, myelodysplastic syndrome, and acute lymphocytic leukemia. The company expects to submit investigational new drug applications to the FDA for both in the fourth quarter of this year.

The solid tumor programs—TSC-200, TSC-201, TSC-202, and TSC-203—are being developed for head and neck, cervical, and anal cancers, as well as non-small cell cancer and melanoma. Those programs are in the lead optimization stage.

Since TScan was founded in 2018, the biotech has raised $160 million, most recently a $100 million Series C round of financing in January. Baker Bros. Advisors is the largest shareholder, with an 18.2% stake after the IPO, according to the prospectus.

TScan plans to spend about $30 million on Phase 1/2 testing of TSC-100, TSC-101, and TSC-102, taking each of them through the completion of the Phase 1 portion of the study and part of the Phase 2 portion. Another $35 million is set aside for bringing three preclinical programs into Phase 1 testing; $25 million is earmarked for developing its discovery-stage programs.