BioPharma, Pharma

Xilio, Ventyx IPOs raise $269M to fuel plans to compete with big pharma drugs

Cancer drug developer Xilio Therapeutics and Ventyx Biosciences, a company with drug candidates in cancer and autoimmune diseases, are the latest life science companies to go public. They’ll use proceeds from their respective IPOs to continue clinical development of drugs being positioned as competitors to drugs from big pharmaceutical companies.


Xilio Therapeutics and Ventyx Biosciences, two biotech companies each with multiple drug candidates viewed as potential competitors to drugs from pharmaceutical giants, have made their public market debuts raising a combined $269.1 million to advance clinical development of multiple programs.

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Xilio’s IPO raised $117.6 million. The Waltham, Massachusetts-based biotech priced its offering of more than 7.3 million shares at $16 apiece, which was the middle of the price range the company had set. Those shares began trading on the Nasdaq Friday under the stock symbol “XLO.”

Xilio focuses on two types of immunotherapies: cytokines, which are signaling proteins that can marshal an immune response to tumors, and checkpoint inhibitors, therapies that block proteins that keep immune cells from recognizing and attacking tumors. Both types of treatments can lead to a powerful immune response to cancer, but the problem is that the effect of this immune response can go beyond the tumors, sparking side effects throughout the body. Xilio said in its prospectus that it is developing immunotherapies engineered in a way that localizes the effect of the treatment, limiting its effects to the tumor microenvironment.

The biotech’s lead drug candidate is a checkpoint inhibitor, XTX101. The monoclonal antibody blocks the checkpoint protein CTLA-4. Bristol Myers Squibb drug Yervoy targets the same protein. Other companies developing CTLA-4 inhibitors include Agenus, AstraZeneca, CytomX Therapeutics, and Macrogenics.

A Phase 1 dose-escalation study is underway for the Xilio drug to establish a dose for Phase 2 testing, by itself and in combination with a different checkpoint inhibitor, Merck’s Keytruda. Preliminary monotherapy data are expected in mid-2022, and for the combination group in the second half of next year.

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A Deep-dive Into Specialty Pharma

A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.

The next program in Xilio’s pipeline, XTX202, is an engineered version of the cytokine IL-2. That drug features a protein “mask” that keeps it from binding to anything until it reaches the tumor microenvironment, where enzymes found in the that environment cleave the mask away. The FDA has cleared the company to begin clinical testing; Xilio expects to begin a Phase 1/2 study in multiple tumor types in the first quarter of next year.

IL-2 competitors to Xilio include Werewolf Therapeutics, which uses different approach to block the cytokine from binding to anything until it reaches the tumor. Asher Biotherapeutics is developing an IL-2 fusion protein engineered to bind only to a specific protein on the surface of T cells. Sanofi has already reached the clinic with its IL-2 candidate, a therapy it acquired via its $2.5 billion acquisition of Synthorx.

Xilio is applying its masking technology to other cytokines. An IL-12 drug candidate, XTX301, is moving toward an investigational new drug application filing, which the company expects in the second half of 2022. An IL-15 drug candidate, XTX401, is in preclinical development.

Prior to the IPO, Xilio had raised $224.5 million, most recently a $95 million Series C round announced in February. Atlas Venture is Xilio’s largest shareholder, with a 9.6% stake after the IPO, the filing shows. F-Prime Capital owns 7.2%, while Bain Capital and Deerfield Management Company each own 5.7%.

The IPO proceeds, combined with Xilio’s cash reserves, will finance clinical development of the biotech’s pipeline. Checkpoint inhibitor candidate XTX101 will receive between $10 million and $15 million to complete Phase 1 testing and prepare for Phase 2. Between $30 million and $35 million is set aside to advance the IL-2 candidate, XTX202, through Phase 1 dose escalation studies, then a Phase 2 test to assess efficacy in patients with solid tumors. Another $20 million to $25 million is earmarked for the IL-12 candidate, XTX301, which the company plans to advance into Phase 1 testing.

Ventyx’s IPO raises $151M to stay in the hunt with BMS, Roche drugs

Ventyx Biosciences has three drugs for inflammatory and autoimmune disorders and its IPO has raised $151.5 million for clinical development of all of them. The clinical-stage biotech offered more than 9.4 million shares for $16 apiece, which was the midpoint of its targeted price range. Those shares began trading on the Nasdaq on Oct. 21 under the stock symbol “VTYX.”

Encinitas, California-based Ventyx was founded by CEO Raju Mohan in 2018. Mohan had also founded two other immunology-focused biotechs, Oppilan Pharma and Zomagen Biosciences, both of which were acquired by Ventyx in February, according to the prospectus. The acquisitions consolidated the drug candidates of the respective companies into a single pipeline.

The lead Ventyx drug candidate, VTX958, is designed to block Tyrosine kinase type 2 (TYK2), which is an enzyme that mediates signaling pathways for immune and inflammatory signaling. The biotech said that its drug is selective and does not activate other immune targets. The small molecule is currently in a Phase 1 single ascending dose study. The company plans a Phase 1b multiple ascending-dose study later in the current quarter. A Phase 2 test is planned in multiple autoimmune conditions including psoriasis, psoriatic arthritis, and Crohn’s disease.

Ventyx aims to address ulcerative colitis with VTX002, a Phase 2-ready drug that works by modulating the S1P receptor. The third Ventyx drug candidate, VTX2735, blocks NLRP3, a protein complex associated with inflammation. The company expects to bring both drugs into clinical testing later in the current quarter. Ventyx added that its pipeline includes NLRP3 inhibitors in preclinical development for central nervous system disorders.

The Ventyx drugs face plenty of potential competition. Bristol Myers Squibb drug Zeposia, an S1P receptor modulator, has FDA approvals in ulcerative colitis and multiple sclerosis. BMS also has TYK2 inhibitor deucravacitinib, which has succeeded in a Phase 3 clinical trial in plaque psoriasis but more recently failed a mid-stage ulcerative colitis study. The pharma giant is pursuing other indications for that drug as well. Meanwhile, Roche has two clinical-stage NLRP3 inhibitors, Inzomelid and Somalix.

Ventyx had raised nearly $175 million prior to the IPO, including a $114 million Series A round of financing announced in March and a $51 million Series B financing about a month ago. New Science Ventures is Ventyx’s largest shareholder with a 37.7% post-IPO stake, followed by venBio with 9.9 % and Third Point Ventures with 7.1%, according to the prospectus.

The company’s cash holdings combined with the IPO proceeds will be used for clinical trials. Between $75 million and $85 million is planned for taking lead program VTX958 through the completion of Phase 2 testing in psoriasis and other indications. Another $45 million to $55 million is set aside for VTX002, which the company aims to take through Phase 2 testing in ulcerative colitis. Up to $11 million will go to VTX2735, advancing that program through Phase 1 testing. Finally, $10 million to $20 million will go toward research, including preclinical development of its other programs.

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