NVSEF - Adlai Nortye Ltd. Begins U.S. IPO Rollout

2023-07-31 18:17:01 ET

Summary

• Adlai Nortye Ltd. has filed to raise $115 million in a U.S. IPO, although the final figure may differ.
• The firm is a clinical stage biopharma developing immunotherapy treatments for solid tumor cancer conditions.
• Adlai Nortye is in Phase 3 trials for its lead candidate and has several major pharma collaboration and licensing relationships, a strong positive in my view.
• I'll provide an update when we learn more about the IPO's pricing and valuation assumptions.

A Quick Take On Adlai Nortye Ltd.

Adlai Nortye Ltd. ( ANL ) has filed to raise $115 million in an IPO of its American Depositary Shares representing underlying Class A shares, according to an SEC F-1 registration statement.

The firm is a clinical-stage biopharma developing drug treatments for various cancer conditions.

Adlai Nortye Ltd. has several major pharma collaboration or licensing relationships and is in Phase 3 trials for its lead candidate.

I’ll provide an update when we learn more about the IPO from management.

Adlai Nortye Overview

Cayman Islands-based Adlai Nortye Ltd. was founded to develop a portfolio of kinase inhibitor-based drugs for the treatment of recurrent or treatment-resistant cancers and solid tumors.

Management is headed by co-founder, Chairman and CEO Yang Lu, who has been with the firm since its inception in 2006 and was previously at Hybio Pharmaceutical Co. Ltd. and obtained his bachelor's degree in biotechnology from Xiamen University.

The firm's lead candidate, AN2025 in-licensed from Novartis (NVS) with exclusive global rights, is in Phase 2 and Phase 3 trials for PIK3CA mutant solid tumors and head and neck squamous cell cancer, respectively. Both trials are in conjunction with other therapies.

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

Adlai Nortye has booked fair market value investment of $17.4 million in equity as of March 31, 2023 from investors, including Archer Future, Nortye Talent, ATCG Holding, JIN YIN ((BVI)) Limited, Nortye International, Unique Mark Ventures, and PECO International.

Adlai Nortye’s Market & Competition

According to a 2022 market research report by Grand View Research, the global market for treatments for head and neck cancer was an estimated $1.22 billion in 2021 and is forecasted to reach $3.5 billion by 2030.

This represents a forecast CAGR (Compound Annual Growth Rate) of CAGR (Compound Annual Growth Rate) of 12.5% from 2022 to 2030.

Key elements driving this expected growth are an increase in the incidence of HNSSC conditions among an aging global population and growing treatment options by drug developers.

Also, the chart below shows the historical and projected future growth trajectory for treatments for the U.S. head and neck cancer market:

Major competitive vendors that provide or are developing related treatments include the following companies:

• Eli Lilly and Company

• Sanofi

• Merck & Co., Inc.

• Clinigen Group plc

• Bristol-Myers Squibb Company

• AstraZeneca

• Takeda Pharmaceutical Company Limited

• Teva Pharmaceutical Industries Ltd

• F. Hoffmann-La Roche Ltd.

The company's other treatment candidates are pursuing other cancer condition markets.

Adlai Nortye Ltd. Financial Status

The firm’s recent financial results are typical of a development-stage biopharma firm, although it has recognized some revenue for a one-time sale of certain of its intellectual property.

Below are the company’s financial results for the past two calendar years:

As of March 31, 2023, the company had $59.8 million in cash and $322.4 million in total liabilities.

Adlai Nortye Ltd. IPO Details

Adlai Nortye intends to raise $115 million in gross proceeds from an IPO of its American Depositary Shares representing underlying Class A shares, although the final figure may differ.

Nippon Kayaku Co., Ltd. has agreed to purchase $40.0 million of Class A shares in a concurrent private placement at the IPO price.

A "potential investor" has indicated a non-binding interest in purchasing shares of up to $50.0 million in the aggregate at the IPO price.

As a foreign private issuer, the company can choose to take advantage of reduced, delayed or exempted financial and senior officer disclosure requirements versus those that domestic U.S. firms are required to follow.

Management says the firm qualifies as an "emerging growth company" as defined by the 2012 JOBS Act and may elect to take advantage of reduced public company reporting requirements; prospective shareholders would receive less information for the IPO and, in the future, as a publicly-held company within the requirements of the Act.

Immediately after the IPO, the company will be a ‘controlled company’ according to Nasdaq rules.

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

to fund the ongoing registrational trial for AN2025 (buparlisib) and the milestone payments in connection with development of AN2025;

to fund the commercial launch, if approved, of AN2025;

to fund the ongoing Phase Ib trial for AN0025 (palupiprant) in the United States and France;

to fund the ongoing Phase I trial both in the United States and China for AN4005;

to fund the ongoing Phase I trial in the United States for the triple combination of AN2025, AN0025, and atezolizumab; and

to fund the discovery and IND enabling studies of pre-clinical drugs;

for expansion of our drug portfolio through a combination of internal R&D activities and external business development efforts; and

for our general working capital and general corporate purposes.

Based on our current operating plan, we believe that the net proceeds from this offering, together with our existing cash and cash equivalents, will enable us to fund our planned operating expenses and capital expenditures through the next 12 months.

(Source - SEC.)

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

Regarding outstanding legal proceedings, management says the firm is not currently a party to any legal proceedings that would have a material adverse impact on its financial condition or operations.

Listed bookrunners of the IPO are Cantor and CLSA.

Commentary About Adlai Nortye’s IPO

ANL is seeking U.S. public capital market investment to fund its pipeline immunotherapy candidates for solid tumors.

The firm’s lead candidate, AN2025 in-licensed from Novartis with exclusive global rights, is in Phase 2 and Phase 3 trials for PIK3CA mutant solid tumors and head and neck squamous cell cancer, respectively. Both trials are in conjunction with other therapies.

The market opportunity for treating various solid tumors is large and expected to grow substantially in the coming years due to a generally aging global population and the rise in cancer incidence among them.

Management has disclosed several major pharma firm collaboration or licensing agreements.

Risks to the company’s outlook as a public company include the relatively short time period that the proposed IPO proceeds will fund the company, only about 12 months.

So, the firm may need to raise significantly more capital in the near future, potentially diluting existing equity shareholders in the process, unless a sufficient rise in share price due to milestone achievement can offset the potential dilution.

The company’s investor syndicate doesn’t include any well-known or established life science venture capital firms.

Cantor is the lead underwriter, and there is no data on the three IPOs led by the firm over the last 12-month period.

Like other firms with Asian country operations seeking to tap U.S. markets, the proposed listing entity operates as a Cayman Islands corporation that owns interests in its other country operations.

U.S. investors would only have an interest in an offshore firm with interests in or only agreements with operating subsidiaries (i.e., potentially no equity interests), which are located in and have substantial operations in China with restrictions or unpredictable regulatory environments regarding those interests.

Additionally, restrictions on the transfer of funds between subsidiaries within China or other Asian countries may exist.

Prospective investors would be well advised to consider the potential implications of specific laws regarding earnings repatriation and changing or unpredictable regulatory rulings that may affect such companies and their U.S. stock listings.

Additionally, post-IPO communications from the management of smaller Asian companies that have become public in the U.S. has been spotty and perfunctory, indicating a lack of interest in shareholder communication, only providing the bare minimum required by the SEC and a generally inadequate approach to keeping shareholders up-to-date about management’s priorities.

When we learn more about the IPO, I’ll provide a final opinion.

Expected IPO Pricing Date: To be announced.

For further details see: