vTv Therapeutics IPO Raises $117M For Alzheimer’s, Diabetes Drugs
[Updated 7/30/15, 4:48 pm. See below. ] Drug developer vTv Therapeutics has joined the ranks of biotech companies going public, raising $117 million in an initial public offering mainly financing late-stage clinical trial work on an Alzheimer’s disease drug candidate that Pfizer pursued, then dropped.
The High Point, NC-based company offered 7.8 million shares at $15 per share, falling on the low end of the $15 to $17 price range it set last week. In its first day of trading Thursday, VTv (NASDAQ: VTVT ) opened at $14 per share, and promptly fell to $12.90 in mid-morning trading. VTv stock closed at $10.71, dow 28.6 percent from its offering price. [This paragraph has been updated to include the day’s trading information. ]
VTv says in its filings that it will apply between $70 million and $80 million of the IPO proceeds toward a Phase 3 clinical trial of its Alzheimer’s drug, a pill called azeliragon. The drug works by binding to a specific receptor on brain tissues, which in turn blocks proteins linked to Alzheimer’s disease that form the telltale plaques and tangles seen in the patients’ brains. VTv says that by acting on this receptor for advanced glycation endproducts, or RAGE, the drug can slow multiple processes associated with the development and progression of Alzheimer’s, such as the buildup of beta-amyloid and tau proteins, vascular dysfunction, and chronic inflammation. VTv believes it is the only company with a drug targeting RAGE, and it adds that unlike other Alzheimer’s drugs in development, azeliragon works on multiple targets.
VTv says its drug has the potential to slow the progression of cognitive decline for patients with mild and mild-to-moderate Alzheimer’s disease, pointing to mid-stage clinical trial results of the drug to support that claim. Patients treated with a 5 milligram dose of azeliragon in a Phase 2b trial showed a statistically significant benefit in cognitive decline compared against those receiving a placebo. That trial was done in partnership with Pfizer (NYSE: PFE ), which had licensed the drug from the North Carolina biotech in 2006.
But the trial results weren’t all positive. Patients who received the higher, 20 mg daily dose appeared to worsen while on the drug. After seeing an increase in confusion, falls, and an apparent acceleration in cognitive decline, Pfizer stopped treating patients with the higher dose. And while a separate interim analysis of patients receiving the lower dose appeared safer, an independent data safety and monitoring board felt that the drug was unlikely to be any better than the placebo. The board recommended stopping the study, which Pfizer did. Pfizer then returned rights to azeliragon to vTv s predecessor in 2011 and no longer has any financial ties to the drug. VTv does, however, have one remaining connection to Pfizer: its executive chairman is Jeffrey Kindler, who was Pfizer’s president and CEO when the big pharma was testing azeliragon (Kindler stepped down from the role in a reported boardroom coup in December 2010).
VTv claims that Pfizer’s decision to stop the azeliragon trial was premature, and that the study would likely have a different result if completed. The interim analysis used data from only 84 patients, rather than the full group of 266 patients. VTv says in its filings that the data had not undergone rigorous database monitoring and error correction, and that after correcting for errors, vTv and independent statisticians couldn’t replicate Pfizer’s analysis. In a presentation for the recent Alzheimer’s Association International Conference in Washington, D.C. included among vTv’s filings Marwan Sabbagh, chief medical officer/scientific officer for the Arizona Alzheimer’s Consortium, said the interim analysis was based on “a single snapshot, a single variable, and a single statistical model different than protocol planned final analysis.”
VTv is picking up where Pfizer left off. For the Phase 3 trial, the company has a “special protocol assessment” an agreement with the FDA on the study’s design and how to analyze the data. Such agreements can minimize the chance that the regulator will reject the drug, as long as the trial meets the agreed upon study goals. In May, vTv began enrolling people in the 800-patient, two-group Phase 3 study. Each group of 400 patients will be randomized to receive the 5 mg daily dose azeliragon; the trial aims to study the drug’s effect on cognitive impairment in Alzheimer’s patients. The company expects to report initial data for the first group, in early 2017. Data from the second group are expected by mid-2018. The FDA has granted “fast track” status for the vTv drug, a designation reserved for drugs addressing unmet medical needs.
The company that is now vTv Therapeutics traces its lineage to TransTech Pharma, a High Point company founded in 1998 by former Merck (NYSE: MRK ) scientist Adnan Mjalli. TransTech’s proprietary drug discovery technology yielded the company’s Alzheimer’s and diabetes drug candidates. The company received an early investment from MacAndews Forbes. a holding company whose portfolio includes a wide mix of companies, such as cosmetics maker Revlon (NYSE: REV ) and privately held direct mail advertising company Valassis. Over the years, MacAndrews poured more than $200 million into TransTech in a combination of debt and equity financings, according to securities filings.
Even though vTv’s stock is now publicly traded, it is a controlled company, meaning that more than half of its shares are owned by a single entity. After the IPO, MacAndrews controls approximately 76.2 percent of the common stock in vTV, according to the prospectus.
TransTech’s path to becoming vTv is littered with corporate moves. Last year, TransTech announced that Mjalli would step down as CEO; his position was temporarily filled by CFO Stephen Holcombe. According to filings, TransTech later sold to Mjalli the High Point Clinical Trials Center, a TransTech subsidiary that conducts clinical trials. Mjalli became CEO of the clinical trials center, while TransTech bought out Mjalli’s TransTech stake. In April, vTv Therapeutics formed with Holcombe as CEO, the former Pfizer executive Kindler as executive chairman, and the former TransTech drugs in its pipeline.
The IPO raises needed funds for vTv, which had just $800,000 in cash and cash equivalents as of March 31. In addition to the up to $80 million that the company will spend on the late-stage Alzheimer’s study, vTv also plans to spend up to $15 million to take two type 2 diabetes drugs into mid-stage clinical trials.
VTv says it expects the cash will keep the company afloat through mid-2017, but it may try to raise more funds by licensing its diabetes drugs to other companies. TransTech got $55.7 million up front for licensing those drugs to Forest Laboratories in 2010, but Forest returned those compounds to TransTech in 2013, shortly before it was acquired by Actavis.
Though Mjalli has no affiliation with vTv, he still has a financial stake in the company’s progress. He could get as much as $150 million in cash or stock payments if his former company hits “operational or transactional events and milestones,” according to vTv filings.
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