Cerulean Limps into Nasdaq Debut With $7 Per Share IPO

Xconomy Boston — 

[Updated 4/10/14, 11:22 am] Apparently Wall Street wasn’t too keen on helping Cerulean Pharma get a second shot at proving its drug delivery technology.

According to IPO research firm Renaissance Capital, the Cambridge, MA-based company priced its IPO at $7 per share, far below the $11 to $13 per share range it had been hoping for. Cerulean will begin trading on the Nasdaq today under the ticker symbol “CERU.”

Cerulean had originally been looking to raise as much as roughly $75 million through the offering by selling 5 million shares. Instead it sold 8.5 million shares at the $7 price, and granted underwriters a 30-day option to purchase up to 1.275 million more, according to a press release. [Paragraph updated to include additional information from the release.]

Leerink Partners, Canaccord Genuity, JMP Securities, and Wedbush Securities are underwriting the offering. Prior to the IPO, Cerulean had raised over $80 million in equity financing its since its 2005 inception from investors like Polaris Partners (32.3 percent stake), Venrock (20.8 percent), Lilly Ventures (16.2 percent), Crown Ventures (10.9 percent), and Lux Capital (9.8 percent).

Cerulean was formed to commercialize a nanoparticle drug delivery technology developed at MIT and Caltech. The company has been using it to administer cancer drugs as a way to boost their effectiveness. Cerulean’s lead drug candidate, CRLX101, for instance, is a cyclodextrin-based polymer linked to camptothecin, a chemotherapy agent. That’s supposed to make it small enough to slip through leaky holes in the blood vessels that feed tumors and deliver a toxin over a sustained period of time, but too large to get into healthy tissues.

Cerulean’s first attempt to prove that approach worked, however, fell flat. The company designed a tough Phase 2b study in terminally ill lung cancer patients, trying to see if CRLX101 could help them live longer—a much more difficult goal than progression-free survival, which is how long a therapy prevents a tumor from spreading. The drug missed its goal in that study, which included 157 people, though Cerulean said at the time it demonstrated a “favorable safety profile.”

Cerulean turned to an IPO to finance a second shot, aiming to use the cash to move ahead with other ongoing clinical trials in kidney, ovarian, and rectal cancers. The cash was urgent too—Cerulean had just $5.5 million on hand at the end of 2013, according to its IPO prospectus.

Cerulean intends to start a Phase 2 trial later this year to test CRLX101 in tandem with Roche/Genentech’s bevacizumab (Avastin) in patients with kidney cancer. It’s already started a two-part mid-stage study testing the drug’s impact on ovarian cancer both as a monotherapy and in combination with bevacizumab, and is planning to start a Phase 2 trial of CRLX101, radiotherapy and capecitabine (Xeloda) in rectal cancer by the end of the year.