BioPharma, Pharma

Lexeo’s IPO Raises $100M for Gene Therapies That Treat the Heart, Protect the Brain

The gene therapy programs of Lexeo Therapeutics span rare forms of cardiomyopathy and certain types of Alzheimer’s disease. But Lexeo’s IPO comes as a rival gene therapy developer sues the biotech, claiming its work employs stolen trade secrets.

Precision medicine is a term commonly associated with cancer treatment, but Lexeo Therapeutics applies it to gene therapies addressing underlying causes of certain cardiovascular and neurological diseases. Lexeo now has $100 million to support two clinical-stage programs and others in its pipeline, but the biotech had to cut the price of its IPO to pull it off.

Lexeo initially planned to offer 9 million shares in the range of $13 and $15 apiece, which would have raised $126 million at the pricing midpoint. Late Thursday, the company offered 9.09 million shares priced at $11 apiece. Those shares will trade on the Nasdaq under the stock symbol “LXEO.”

The gene therapy research of New York-based Lexeo focuses on larger rare diseases (affecting 5,000 to 200,000 patients) as well as prevalent diseases with a genetically defined subset of patients. Lexeo’s most advanced program is for Friedreich’s ataxia, a rare neuromuscular disorder that so far has only one FDA-approved treatment. The disease stems from a genetic mutation that leads to low levels of frataxin, a protein key to cellular function. Friedreich’s ataxia patients experience progressively worsening skeletal muscle weakness. Nearly all of these patients also develop heart problems, or cardiomyopathy. In most genetic cardiomyopathies, existing therapies do not modify the disease, Lexeo said in its IPO filing.

“In cases where a disease-modifying treatment option is available, the current standard of care only forestalls disease progression,” the company said. “We believe our cardiovascular precision medicine focus offers the opportunity to treat the underlying root cause of the disease and more effectively reverse disease progression with a single dose.”

Lexeo’s LX2006 treats Friedreich’s ataxia-driven cardiomyopathy by delivering a functional version of the gene that codes for frataxin. In Phase 1 testing, Lexeo says an increase in the expression of frataxin has been observed in the heart of one patient so far in the low-dose group. Additional interim data are expected in mid-2024.

The prevalent disorder that Lexeo is targeting is Alzheimer’s disease. The most advanced Lexeo Alzheimer’s program, LX1001, has reached human testing in those who have inherited two copies of the APOE4 gene, a known risk factor for the neurodegenerative disorder. Lexeo’s gene therapy delivers the APOE2 gene, which is thought to be neuroprotective.

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In the filing, Lexeo says an increase in APOE2 levels has been observed in the first dose group, along with a trend toward improvement in the biological indicators of Alzheimer’s. The company expects enrollment will be complete by the end of the year; additional interim data are expected in the second half of next year.

New York-based Lexeo formed in 2017 based on the research of scientific founder Ronald Crystal, a professor and the chairman of Weill Cornell Medicine’s genetic medicine department. The company is led by CEO Nolan Townsend, the former head of Pfizer’s rare disease commercial business unit. Lexeo’s initial programs came from a collaboration between the company, Crystal, and Cornell University. The Phase 1/2 test of LX1001 in cardiomyopathy began at Cornell in 2019.

Lexeo has another cardiomyopathy program on track for the clinic. LX2020 is a potential treatment for arrhythmogenic cardiomyopathy caused by mutations in the PKP2 gene. In July, the FDA cleared this gene therapy to begin clinical testing. Lexeo said in the IPO filing that it expects the first patient will be dosed in the first half of 2024. Interim data are expected in the second half of next year.

Lexeo Faces Litigation From a Gene Therapy Rival

LX2020 puts Lexeo in potential competition with Rocket Pharmaceuticals, which is set to begin clinical testing of its gene therapy for PKP2 arrhythmogenic cardiomyopathy. But before either therapy reaches the market, competition could play out in a courtroom. A lawsuit filed on Oct. 12 in the Southern District of New York alleges that Lexeo hired two Rocket scientists, who took with them confidential and proprietary information about Rocket for the benefit of their new employer.

Among Rocket’s claims in its 57-page complaint is that one of those former employees transferred 122,987 work-related emails and documents to his personal computer and also took photos of Rocket labs. The Cranbury, New Jersey-based biotech alleges that the information its two former employees provided to Lexeo allowed that company to “close the gap” and secure FDA clearance of an investigational new drug application for its PK2P program just weeks after Rocket’s. Rocket claims Lexeo “could not have independently developed its PKP2 gene therapy program, particularly in the timeframe it did, without the wrongful acquisition and use of Rocket Pharma’s trade secrets.”

Lexeo’s IPO filing acknowledges the Rocket lawsuit, stating that the firm is reviewing the allegations with its lawyers. However, Lexeo did not respond directly to any of Rocket’s claims.

“We intend to defend this litigation vigorously, and while it is not possible to predict the outcome with certainty, we currently do not expect the final outcome will have a material adverse effect on our timelines for development of our product candidates,” Lexeo said in the filing.

The case is Rocket Pharmaceuticals, Inc. v. Lexeo Therapeutics et. al., case no. 1:23-cv-09000-PKC

Cash for the Clinic

In the IPO filing, Lexeo said it has raised $183.7 million since its inception. Before the IPO, its most recent financing was a $100 million Series B round in 2021. As of the end of the second quarter of this year, Lexeo reported a cash position of $45.5 million. That capital, along with the IPO proceeds, will support the Lexeo pipeline.

About $45 million is budgeted for completing the Phase 1/2 clinical test of LX2006 in Friedreich’s ataxia patients and for preparing this gene therapy for a pivotal study that could support an FDA submission. Another $40 million is set aside for the ongoing Phase 1/2 testing of LX2020 for treating PKP2-arrhythmogenic cardiomyopathy. The company plans to spend $10 million for completing the Phase 1/2 study evaluating LX1001 in Alzheimer’s disease.

Finally, $15 million is set aside for development of its other gene therapy programs, including the preclinical-stage LX2021, a potential treatment for Desmoplakin cardiomyopathy.

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