Inotek Pharmaceuticals is about to make its Nasdaq debut, but not at the price it was shooting for.
The Lexington, MA-based company priced its IPO late Tuesday, selling 6.67 million shares at $6 apiece and raising about $40 million before discounts due to underwriters.
The company had aimed to sell 4.6 million shares at $13 to $15, but it had to cut the price by more than half and offer 50 percent more shares to pull off the IPO. Inotek also raised $20 million in a concurrent debt financing, according to regulatory filings.
The company will begin trading on Nasdaq on Wednesday under the ticker symbol “ITEK.”
Inotek is developing treatments for glaucoma, a build-up of fluid inside the eye that damages the optic nerve. Patients can gradually lose their vision if the condition isn’t treated. It’s a chronic disease; once people get glaucoma—roughly 2.8 million Americans live with the condition—they have to take eye drops for the rest of their lives.
There are plenty of treatments available for glaucoma, but Inotek is trying a new approach. There hasn’t been a new class of glaucoma drugs approved in the U.S. in almost 20 years.
Patients with glaucoma are typically prescribed eye drops called prostaglandin analogues (PGAs), which are often generics. Other drops known as beta blockers or adrenergic agonists either boost the effects of PGAs or serve as an alternative therapy. All of these drugs work by either slowing down the eye’s rate of fluid production or helping drain fluid from the eye.
But PGAs don’t directly target what’s known as the trabecular meshwork, the eye’s main drainage system, which experts say is responsible for the fluid buildup. Inotek and its Bedminster, NJ-based rival Aerie Pharmaceuticals (NASDAQ: AERI) both have drugs that directly target this tissue, just via different avenues.
Inotek’s trabodenoson is supposed to spur enzymes within the tissue to clear out the proteins that are clogging the drain, so to speak. Aerie’s drug candidate, Rhopressa, is supposed to block two targets—one of which, the rho kinase, is implicated in fluid drainage.
The two companies are hoping to prove, at minimum, their approaches can boost the effects of PGAs; and at best, compete directly with them.
Aerie is firmly in the lead. It’s running a 1,300-patient Phase 3 study with data expected as early as the second quarter of 2015. Inotek aims to use its IPO cash to start a late-stage program consisting of two trials and a long-term safety study that should read out in late 2016 or early 2017.
While Inotek is behind, it contends it will have a safety edge, because rho kinase inhibitors have been reported to cause eye redness. Inotek hasn’t seen that side effect with its drug as of yet, though those claims will be tested in the coming clinical trials.
Inotek says it will also fund a mid-stage study that combines trabodenoson and latanoprost (Xalatan, the most commonly prescribed PGA). It will also pursue early work to study trabodenoson in optic neuropathies and certain degenerative retinal diseases.
Devon Park BioVentures, with a 25.7 percent stake, is Inotek’s most significant shareholder. Next are Rho Ventures (20.4 percent), Care Capital (17.8 percent), MedImmune Ventures (16 percent), and Pitango Venture Capital Fund (11.6 percent). The company has burned through $126 million since its inception in 1999.
David Southwell, the former CFO of Human Genome Sciences, which was acquired by GlaxoSmithKline in 2012, was named Inotek’s president and CEO in July.
Cowen and Co., Piper Jaffray, Nomura Securities, and Canaccord Genuity are Inotek’s underwriters.
Photo courtesy of flickr user naturalhomecures34 via Creative Commons.
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