Checkmate Pharmaceuticals Begins IPO Process

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Summary

Checkmate Pharmaceuticals has filed to raise $75 million in an IPO.

The firm is developing a drug candidate for the treatment of various cancers.

CMPI has shown promising early trial results and has enviable major pharma collaboration relationships.

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Quick Take

Checkmate Pharmaceuticals (CMPI) has filed to raise $75 million in an IPO of its common stock, according to an S-1 registration statement.

The company is a clinical stage biopharma advancing a drug treatment candidate for melanoma and head & neck cancer.

CMPI has produced promising early trial results and has significant collaboration partnerships with major pharma firms.

I’ll provide a final opinion when we learn more about the IPO from management.

Company & Technology

Cambridge, Massachusetts-based Checkmate was founded to develop its CMP-001 candidate, a Toll-like receptor 9, TLR9 'agonist delivered as a biologic virus-like particle, or VLP.'

Management is headed by Barry Labinger, who has been with the firm since December 2018 and was previously president and CEO of Biothera Pharmaceuticals, a clinical stage cancer immunotherapy company.

Below is a brief overview video of skin cancers:

Source: Osmosis

The firm's drug candidate 'is designed to trigger the body's innate immune system...and directing activated anti-tumor T cells to attack both the injected tumor and also tumors throughout the body.'CMP-001 has produced a 'best overall response rate of 28%, including post-progression responders.'

Below is the current status of the company’s drug development pipeline:

Source: Company S-1 Filing

Investors in the firm have invested at least $191 million and include Sofinnova Ventures, venBio, Novo Holdings, Longitude Capital Partners, Decheng Capital, F-Prime Capital, Medicxi and Omega Fund.

Market & Competition

According to a 2018 market research report by Research And Markets, the global market for melanoma treatments is expected to reach $5.9 billion by 2023.

This represents a forecast CAGR (Compound Annual Growth Rate) of CAGR of 12.62% from 2018 to 2023.

Key elements driving this expected growth are continued exposure to ultraviolet light and population aging leading to reduced immune system function.

Also, the market for HNSCC (Head and Neck Squamous Cell Carcinoma) is expected to reach $4.5 billion by 2027, growing at an expected 17.3% from 2020 to 2027.So, the combined markets for the company's drug treatment pipeline are forecast to grow to approximately $10.4 billion by the late 2020's.

Major competitive vendors that provide or are developing treatments include:

Financial Status

Checkmate’s recent financial results are typical of a development stage biopharma in that they feature no revenue and significant R&D and G&A expenses associated with advancing its pipeline.

Below are the company’s financial results for the past two and ¼ years (Audited PCAOB for full years):

Source: Company registration statement

As of March 31, 2020, the company had $3.9 million in cash and $5.0 million in total liabilities. (Unaudited, interim)

IPO Details

Checkmate intends to raise $75 million in gross proceeds from an IPO of its common stock, although the final amount may be different.

No existing shareholders have indicated an interest to purchase shares at the IPO price, although this element may become a feature of the IPO if disclosed in a future filing.

Management says it will use the net proceeds from the IPO as follows:

to fund the completion of a Phase 2 PD-1 refractory melanoma study and supporting studies to enable a potential submission of a Biologics License Application seeking accelerated approval;

to fund the development of CMP-001 in PD-1 naïve front-line melanoma;

to fund the completion of a Phase 2 proof of concept study in head and neck squamous cell carcinoma; and

the remainder for working capital and general corporate purposes.

Management’s presentation of the company roadshow is not available.

Listed bookrunners of the IPO are BofA Securities, Jefferies, BMO Capital Markets and BTIG.

Commentary

Checkmate is seeking public capital market funding to advance its CMP-001 drug candidate programs for the treatment of various cancers.

The company’s lead candidate is being trialed as a front line, refractory and adjuvant compound. It has produced promising overall response rate results in its trials to-date.

The market opportunity for the treatment of the various cancers targeted is large and expected to grow substantially in the years ahead, reaching more than $10 billion by the late 2020’s if forecasts are accurate.

The firm has developed a clinical collaboration with Merck and Pfizer for testing CMP-001 in conjunction with avelumab.

The company’s investor syndicate includes a number of well-known and highly regarded biotech investment firms.

I look forward to learning more details about the IPO from management.

Expected IPO Pricing Date: To be announced.

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