Celgene Partner Acceleron Files For IPO; Plans to Raise Up to $75M

Celgene Partner Acceleron Files For IPO; Plans to Raise Up to $75M

Add another biotech with a big Celgene (NASDAQ: CELG) partnership to the IPO queue.

Cambridge, MA-based Acceleron Pharma, a company developing drugs for certain types of blood cancers and orphan diseases, has filed papers with the Securities and Exchange Commission outlining plans to go public and raise up to $74.75 million. Acceleron, which aims to trade on the Nasdaq under the symbol “XLRN,” hasn’t yet outlined how many shares it plans to sell to public investors in the IPO.

Summit, NJ-based Celgene has also agreed to purchase an unspecified number of additional shares at the IPO price in a concurrent transaction, according to the filing. Celgene is also one of Cambridge-based Agios Pharmaceuticals’ (NASDAQ: AGIO) shareholders and cut the same type of deal with Agios upon its IPO a few weeks ago.

Acceleron has raised $144 million in equity financing from venture investors and partners since its inception in 2003, according to the IPO prospectus. Polaris Venture Partners (15.6 percent) is its largest shareholder, followed by Advanced Technology Ventures (12.5 percent), Venrock (12.4 percent), Celgene (12.3 percent), Flagship Ventures (11.1 percent), and OrbiMed Advisors (10.6 percent).

Citigroup Global Markets and Leerink Swann are joint book-running managers for the IPO. JMP Securities and Piper Jaffray are underwriters along with Citigroup and Leerink.

Several of Acceleron’s executives, led by CEO and co-founder John Knopf, trace their roots back to the Cambridge-based Genetics Institute, a biotech powerhouse in the ’80s and ’90s. The company is discovering drugs that block one of the roughly 30 members of the TGF-beta superfamily of proteins, which are involved in red blood cell formation. Acceleron has used that approach to create two experimental drug candidates—sotatarcept and ACE-536—designed to stop anemia in patients with beta-thalassemia or myelodysplastic syndrome, two red blood cell disorders.

Perhaps more importantly, Acceleron has a few other plans for those drugs as well. Acceleron says that sotatarcept, for example, has shown signs of being able to increase bone mass and stop tumors from growing in mouse models of multiple myeloma. Acceleron, with Celgene’s help, is conducting two mid-stage clinical trials testing the drug in patients with multiple myeloma or chronic kidney disease—many of whom suffer from both anemia and bone loss, Acceleron says.

Like breakout IPO stars Epizyme (NASDAQ: EPZM), BlueBird Bio (NASDAQ: BLUE), and Agios, Acceleron has the financial backing of Celgene through a big early-stage partnership. The biotech giant is funding all of the development and commercial expense costs of sotatarcept and ACE-536, and in return can share the economics of the two drugs with Acceleron in the U.S., and bring in all the revenue those drugs generate internationally (assuming they pass through clinical trials successfully and are approved by regulators). Acceleron will get royalties in the “low-to-mid 20 percent range” on sotatarcept and ACE-536, and stands to receive as much as $567 million in milestone payments tied to various development goals, according to the SEC filing.

Sotatarcept and ACE-536 are in ongoing, mid-stage clinical trials in patients with anemia from beta-thalassemia and myelodysplastic syndrome, respectively. Acceleron expects to begin late-stage clinical trials in one or both of those disease types by the end of 2014, or early 2015. The FDA has already given ACE-536 orphan drug status, which gives it longer market exclusivity. Celgene plans to seek the same designation for sotatarcept, according to the IPO prospectus.

Acceleron also has a third drug candidate, a cancer drug known as dalantercept, that is designed to block the formation of certain blood vessels that nourish tumors by targeting activin receptor-like kinase 1, a receptor found on endothelial cells, which form the inner layer of blood vessels. Acceleron doesn’t have a partnership in place for dalantercept, but it believes the drug has the chance to be either an alternative therapy, or combination treatment, with the slew of approved cancer drugs that shut down vascular endothelial growth factor, a gene that similarly helps form blood vessels that feed tumors. Those drugs include Onyx Pharmaceuticals’ sorafenib (Nexavar) and Pfizer’s sutinib (Sutent), among others. Dalantercept is in a few mid-stage clinical trials as well.

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