Ayala Pharmaceuticals has two clinical-stage cancer drugs licensed from Bristol Myers Squibb. Now it has $55 million to take those drugs further than the pharmaceutical giant did.
On Thursday evening, Ayala priced its IPO, which consisted of 3.7 million shares sold for $15 each. That price was the midpoint of the targeted $14 to $16 per share range, but the Rehovot, Israel-based company was able to increase the number of shares in the offering by 10 percent. Ayala is expected to begin trading on the Nasdaq Friday under the stock symbol “AYLA.”
Ayala’s lead candidate, AL101, is an injectable small molecule that blocks gamma secretase, an enzyme that activates the Notch signaling pathway. This pathway plays a role in both solid tumors and blood cancers. Bristol (NYSE: BMY) had tested the drug in three Phase 1 studies—all of them failures.
Ayala is trying for a better outcome. In its prospectus, the company says patients in the Bristol studies weren’t selected according to whether their cancers were characterized by Notch activation. Ayala uses DNA sequencing technology to identify patients whose cancers are most likely to respond to AL101. The company is currently testing the drug in an open-label Phase 2 study enrolling patients with adenoid cystic carcinoma, a rare form of cancer affecting secretary glands, such as the salivary glands.
Of the estimated 3,400 patients who have adenoid cystic carcinoma, Ayala says about 1,700 have disease that is recurrent or metastatic. The company calculates that 18 to 20 percent of these patients have cancers with Notch-activating mutations. There are no FDA-approved drugs for this cancer.
As of April 28, Ayala has some early data safety and efficacy data from its Phase 2 test of AL101, according to the prospectus. Additional data will be presented at medical conferences in the second half of this year. Ayala also plans to test AL101 in two other cancers characterized by Notch pathway activation: triple negative breast cancer and acute lymphoblastic leukemia.
Ayala’s second compound, an oral drug called AL102, is also a gamma secretase inhibitor. The company is developing the former Bristol compound as a treatment for desmoid tumors, which occur in connective tissue. There are currently no FDA-approved therapies for desmoid tumors, though SpringWorks Therapeutics (NASDAQ: SWTX) is in the hunt testing a drug licensed from Pfizer (NYSE: PFE). The SpringWorks compound is in Phase 3 testing. Ayala plans to start a Phase 2 trial for its desmoid tumor drug candidate in the second half of this year.
AL102 is also being developed as a potential treatment for multiple myeloma under a partnership with Novartis (NYSE: NVS). The plan is to evaluate the drug in combination with Novartis’s B-cell maturation antigen therapies. The agreement gives the Swiss pharma giant the option to license the Ayala drug. A Phase 1 study has started but patients have not yet been dosed, according to the prospectus. The agreement calls for Novartis to pay up to $4.3 million of Ayala’s research and development expenses.
Ayala plans to use $13 million to $14 million to advance AL101 through the adenoid cystic carcinoma Phase 2 study, the company says in its IPO documents. Another $11 million to $12 million is earmarked for the planned mid-stage study in triple negative breast cancer; $6 million to $7 million for the acute lymphoblastic leukemia test. AL102 will require $7 million to $8 million for the Phase 2 study in desmoid tumors.
Ayala formed in 2017, the same year it licensed AL101 and AL102 from Bristol. The biotech says it has raised $46.3 million since its launch. The company’s largest shareholder is Israel Biotech Fund, which holds a 25.5 percent post-IPO stake, according to the prospectus. Novartis owns 5.2 percent of the biotech; Bristol 4.6 percent.