Kymera Therapeutics Starts $100 Million IPO Process

Kymera Therapeutics (KYTX) intends to raise $100 million in an IPO of its common stock, according to an S-1 registration statement.

The firm is a preclinical biopharma researching treatments for various skin disorders and immune conditions.

While KYTX is still at a very early stage, the firm has impressive collaborations and investor partners.

Watertown, Massachusetts-based Kymera was founded to create treatment options for hidradenitis suppurativa [HS] and atopic dermatitis [AD] as well as other immune system mediated conditions.

Management is led by co-founder, president and CEO Nello Mainolfi, Ph.D., who was previously Head of Drug Discovery at Raze Therapeutics.

Below is a brief overview video of hidradenitis suppurativa:

Source: JJ Medicine

The firm’s lead drug treatment candidate is KT-474 and is still in preclinical stage and management expects to submit an IND for a Phase 1 safety trial in 2021.

Below is the current status of the company’s drug development pipeline:

kymerapipe

Source: Company S-1 Filing

Investors in the firm have invested at least $95 million and include Atlas Venture Partners, Vertex Pharmaceuticals (VRTX), Lilly Ventures (LLY), Pfizer (PFE), 6 Dimensions and Bessemer Venture Partners.

According to a 2019 market research report by GlobalData, the global market for hidradenitis suppurativa was valued at $898 million in 2018 and is expected to reach $1.8 billion in 2028 across the seven major markets.

This represents a forecast CAGR (Compound Annual Growth Rate) of 7.2% from 2019 to 2028.

Key elements driving this expected growth are new therapeutics in the interleukin inhibitor space and new companies entering the space to develop better and more targeted treatment options.

Also, the global atopic dermatitis market was a little over $4 billion in 2016 and expected to grow at a CAGR of 6.6% through 2022.

The U.S. atopic dermatitis market history and projection is shown in the chart below:

kymeramkt

Major competitive vendors that provide or are developing treatments include:

  • Arvinas (ARVN)
  • Nurix Therapeutics (NRIX)
  • C4 Therapeutics
  • Vividion Therapeutics

The global atopic dermatitis market is large and expected to reach $18.3 billion by 2027, according to a research report by GlobalData.

Kymera’s recent financial results are slightly atypical for a biopharma at IPO in that the firm has received some uneven collaboration revenue to offset its significant R&D and G&A costs.

Below are the company’s financial results for the past two and ½ years (Audited PCAOB for full years):

kymerapl

Source: Company registration statement

As of June 30, 2020, the company had $156 million in cash. (Unaudited, interim)

Kymera intends to raise $100 million in gross proceeds from an IPO of its common stock, although the final amount may be different.

No existing shareholders have indicated an interest to purchase shares at the IPO price, although this element may become a feature of the IPO if disclosed in a future filing.

Management says it will use the net proceeds from the IPO as follows:

to fund the development of our IRAK4 through the completion of our planned Phase 1 clinical trial;

to fund the development of our IRAKIMiD program through the completion of our planned Phase 1 clinical trial;

to fund the development of our STAT3 program through the completion of our planned Phase 1 clinical trial; and

the remainder, if any, to fund the continued expansion of our platform technology, preclinical studies for research stage programs, working capital, and other general corporate purposes.

Management’s presentation of the company roadshow is not available.

Listed bookrunners of the IPO are Morgan Stanley, BofA Securities, Cowen and Guggenheim Securities.

Commentary

Kymera is seeking a higher than normal life science IPO transaction size to advance its varied pipeline.

The firm’s lead candidate is still in preclinical stage and management expects to enter Phase 1 safety trials during 1H 2021.

The rest of its candidates are either in preclinical stage or even earlier in discovery stages of development.

The market opportunities for the various indications its drugs seek to treat are large, whether in the skin condition or solid tumor areas.

Management has achieved multiple collaboration partnerships, with Sanofi and Vertex, which are positive signals of scientific validation.

The company’s investor syndicate includes major pharma partners and highly regarded life science venture capital firm investors.

Morgan Stanley is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 62.7% since their IPO. This is a top-tier performance for all major underwriters during the period.

While Kymera is still at preclinical stage for its lead candidate, the firm has a number of positive aspects and will be worth a closer look.

I’ll provide an update when we learn more about the IPO from management.

Expected IPO Pricing Date: To be announced.

Glossary Of Terms

(I have no position in any stocks mentioned as of the article date, no plans to initiate any positions within the next 48 hours, and no business relationship with any company whose stock is mentioned in this article. IPO stocks can be very volatile in the days immediately after an IPO. Information provided is for educational purposes only, may be in error, incomplete or out of date, and does not constitute financial, legal, or investment advice.)

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