Tokai Pharmaceuticals may be trying to break into an increasingly crowded field of prostate cancer drugs, but Wall Street investors clearly like its chances to make an impact.
Cambridge, MA-based Tokai priced its IPO at $15 per share, the top of its projected range. It also sold 6.48 million in the offering, over a million more than it initially planned, raising a total of $97.2 million before discounts due to underwriters. Those underwriters—BMO Capital Markets, Stifel Nicolaus, and William Blair—also have the option to buy another 972,000 shares of Tokai stock at the IPO price, which could boost the company’s total raise.
Tokai will begin trading on the Nasdaq this morning under the ticker symbol “TKAI.”
Tokai is using the cash to develop its prostate cancer drug, galeterone. While the paradigm for prostate cancer treatment has shifted in recent years due to the entry of new pills from Astellas Pharma/Medivation (NASDAQ: MDVN) and Johnson & Johnson—enzalutamide (Xtandi) and abiraterone (Zytiga), respectively, which are both approved to treat patients before and after chemotherapy—Tokai’s pitch is that galeterone is essentially a combination therapy in a single pill.
Galeterone employs tactics used by both enzalutamide (an androgen blocker) and abiraterone (which targets an enzyme called Cyp17 lyase that’s required for androgen production), while also degrading the androgen receptor on tumor cells, in theory blocking the androgen hormones that feed prostate cancer tumors in three different ways. Tokai believes this combination strategy might give it some efficacy advantages over other prostate cancer drugs. And unlike abiraterone, galeterone also doesn’t have to be administered with prednisone, an immunosuppressive steroid.
Still, given the way the prostate cancer field has evolved, Tokai is first trying to edge its way in by treating patients whose tumor cells have an altered, “truncated” androgen receptor—a group that, the company says, may not be effectively treated by drugs like abiraterone or enzalutamide—before branching out into other subsets of prostate cancer patients. Tokai aims to start a Phase 3 trial for the truncated androgen receptor group in the first half of 2015. The company also has Phase 2 trials up and running in a variety of different prostate cancer populations. The IPO cash will fund that effort.
Tokai has raised more than $85 million in venture funding since its inception from the likes of Apple Tree Partners (49.15 percent stake), Novartis BioVentures (28.12 percent), and entities associated with former Goldman Sachs managing director Muneer Satter.