Atara Biotherapeutics took a fairly unusual route to the Nasdaq. The Brisbane, CA-based company looked all set to price an IPO in July before abruptly yanking the offering, reportedly due to pending data on one of its drugs. After a small hiatus and a tiny deal with Memorial Sloan-Kettering Cancer Center to add to its pipeline, today Atara finally made it back—only to get a cold reception from Wall Street.
Atara (NASDAQ: ATRA) priced 5 million shares at $11 apiece on Thursday, raising some $55 million before discounts due to underwriters. The price came in well below Atara’s projected $14 to $16 per share range, and continued trending downward once trading opened to the public before rebounding a bit and closing at $10.48 apiece.
Atara has a group of big-named backers in private equity, venture capital, and Big Biotech. Kleiner Perkins Caulfield & Byers held, 18.6 percent of Atara at the time of the offering, followed by Domain Associates (13.2 percent), DAG Ventures (13.2 percent), Baupost Group (11.8 percent), Immobiliaria Carso SA de CV (8.7 percent), Celgene (8.7 percent), and Amgen (8.6 percent).
Atara was formed October 2012, when former Celgene business development executive Isaac Ciechanover (pictured above) licensed two molecules from Amgen that were being deprioritized as part of an R&D portfolio revamp at the big Thousand Oaks, CA-based company. The two molecules were an experimental “peptibody” drug (a genetically engineered peptide-antibody combination), which is supposed to treat muscular atrophy in patients on kidney dialysis; and a second candidate for ovarian cancer. The former drug is now known as PINTA-745; the latter STM-434 (both references to Christopher Columbus’s ships, the Pinta and Santa Maria).
Ciechanover put a VC syndicate together and formed Atara around those two drugs, as well as a few other preclinical programs originally developed by Amgen. Like Cambridge, MA-based Nimbus Discovery and San Diego-based Inception Sciences, the company was set up as limited liability company (LLC) to make it easy to sell off individual drug candidates to buyers who may be interested in one drug, but not the whole company.
After raising a $38 million Series B in December, however, Atara changed its approach. The company decided to re-integrate its subsidiaries this spring, and charge towards an IPO, according to regulatory filings. It ultimately filed for the offering in June to help fund its clinical trials.
Amgen already ran three Phase 1 trials on PINTA-745 in healthy volunteers and patients with prostate cancer. So Atara aimed to use the IPO cash to fund an ongoing Phase 2 trial for PINTA-745, and the first clinical work for STM-434. The Phase 2 study of PINTA-745 should produce data in the second half of 2015, while the Phase 1 trial for STM-434 is expected to be underway later this year.
Atara set a $14 to $16 per share range for the offering, and looked to be on the verge of pricing it in July before abruptly postponing the deal. The company didn’t officially explain why, though some published reports indicated that it had gotten fresh preclinical data about its ovarian cancer drug. Indeed, there was a new section in Atara’s prospectus when it refiled its S-1 in October: On July 22, Amgen revealed that some monkeys dosed with a drug closely related to STM-434 (named STM-217) in a 2009 pharmacology study had bleeding issues. It wasn’t confirmed that was because of the Amgen drug, but Atara has changed the design of its Phase 1 study to exclude patients with a high risk of bleeding as a result.
In the meantime, Atara also diversified. It nabbed an option to license three cancer and antiviral immunotherapies from Memorial Sloan Kettering Cancer Center in New York for $1.25 million in cash and close to 60,000 shares of stock. (Sloan-Kettering would get $4.5 million in cash up front and up to $33 million in additional fees if Atara exercises its option.)
Perhaps investors would have smiled upon that diversification effort a few months ago and rewarded Atara with a big valuation. But the Dow Jones Industrial Average has plummeted amidst a broad stock sell-off this week, and that slump trickled down to the biotech IPO market. Dance Biopharm withdrew its offering on Thursday, and even Forward Pharma (NASDAQ: FWP) which raked in $221 million in the biotech industry’s largest 2014 IPO, plummeted 17 percent in its debut.
Goldman Sachs, Citigroup Global Markets, and Jefferies LLC are Atara’s underwriters.