Sigilon Therapeutics Proposes Terms For $101 Million IPO

Sigilon Therapeutics (SGTX) has filed to raise $101 million from the sale of its common stock in an IPO, according to an amended registration statement.

Cambridge, Massachusetts-based Sigilon was founded to develop its Shielded Living Therapeutics platform which uses advanced techniques to create therapeutic molecules for the treatment of rare blood disorders, lysosomal storage diseases and endocrine diseases.

Management is headed by Rogerio Vivaldi Coelho, MD., who has been with the firm since 2018 and was previously EVP and Chief Global Therapeutics Officer at Bioverativ until it was acquired by Sanofi in 2018.

Below is a brief overview video of Sigilon’s approach:

Source: Alliance for Regenerative Medicine

The firm’s lead candidate, SIG-001, is being developed to treat patients with Hemophilia A.

The potential advantage of the drug is that it would avoid life-long repeat intravenous administrations in favor of being ‘administered intraperitoneally..[with] each dose to have a duration of three to five years.’

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

sigilonpipe

Source: Company S-1 Filing

Investors in the firm have invested at least $117 million and include Flagship Pioneering, Eli Lilly and Company (LLY) and others.

According to a 2020 market research report by Grand View Research, the global hemophilia (all types) market was valued at nearly $12 billion in 2019 and is expected to reach $18.1 billion by 2027.

This represents a forecast CAGR (Compound Annual Growth Rate) of 5.5% from 2019 to 2027.

Key elements driving this expected growth are increasing awareness campaigns and supportive initiatives by governments such as early screenings of children.

Also, the availability of limited treatment therapies is encouraging further R&D efforts by newer organizations.

Below is a graphic showing the historical and future projected U.S. market size for various hemophilia types:

sigilonmkt

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

  • Bayer (BAYRY)
  • CSL Behring
  • Roche (RHHBY)
  • Novo Nordisk (NVO)
  • Octapharma
  • Pfizer (PFE)
  • Sanofi (SNY)
  • Takeda Pharmaceuticals (TAK)
  • Amicus Therapeutics (FOLD)
  • BioMarin Pharmaceutical (BMRN)
  • Ultragenyx Pharmaceuticals (RARE)
  • Others

Sigilon’s recent financial results are atypical of a clinical stage biopharma in that they feature material collaboration revenue from its collaboration with Eli Lilly & Co.

Below are the company’s financial results for the past two and ¾ years (Audited PCAOB for full years):

sigilonpl

Source: Company registration statement

As of September 30, 2020, the company had $62.6 million in cash and $74.8 million in total liabilities. (Unaudited, interim)

SGTX intends to sell 5.6 million shares of common stock at a midpoint price of $18.00 per share for gross proceeds of approximately $101 million, not including the sale of customary underwriter options.

No existing shareholders have indicated an interest to purchase shares at the IPO price, a common feature of life science IPOs.

Assuming a successful IPO at the midpoint of the proposed price range, the company’s enterprise value at IPO would approximate $475.3 million.

Excluding effects of underwriter options and private placement shares or restricted stock, if any, the float to outstanding shares ratio will be approximately 19.45%.

Per the firm’s most recent regulatory filing, it plans to use the net proceeds as follows:

We intend to use the net proceeds from this offering, together with cash on hand, for our Phase 1/2 clinical trials and ongoing development for SIG-001 for treatment of Hemophilia A, IND-enabling studies and the potential initiation of clinical studies for certain of our other current programs, to continue to scale our GMP manufacturing processes for our lead product candidates SIG-001 and SIG-005, continued advancement of our platform technologies and discovery-stage research for other potential programs and general corporate purposes.

Management’s presentation of the company roadshow is available here.

Listed underwriters of the IPO are Morgan Stanley, Jefferies, Barclays, and Canaccord Genuity.

Commentary

SGTX is seeking public funding to advance its ambitious and varied pipeline of programs.

For its lead candidate, SIG-001, to treat patients with moderate-to-severe Hemophilia A, the firm has just begun Phase 1 safety trials.

The first patient in the trial showed an improvement in FVIII, leading management to state that it believes ‘that the cells residing in our spheres are producing measurable FVIII in this first patient at the lowest dose.’

Management said it has plans to extend its reach within the Hemophilia treatment space to Hemophilia B.

The market opportunities for the various treatment areas the firm is targeting are substantial and growing at a moderate rate.

The firm has a collaboration with major pharma company Eli Lilly for its Type 1 diabetes preclinical stage program and has received material upfront payment and an investment by Lilly in the company’s equity, so this collaboration is a validation of sorts.

The firm’s investor syndicate also includes Flagship Pioneering, a highly regarded life sciences venture capital firm.

Morgan Stanley is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 71.7% since their IPO. This is a top-tier performance for all major underwriters during the period.

As to valuation, management is asking IPO investors to pay an enterprise value of around $475 million, which is in the typical range of valuations for life science companies at IPO, albeit on the high end of the range.

Sigilon has produced promising early results, has a significant major pharma collaboration and solid investor group.

For life science investors with a patient hold time frame, my opinion on the IPO is a BUY at up to $18.00 per share.

BUY

Expected IPO Pricing Date: December 3, 2020.

Glossary Of Terms

(I have no position in any stocks mentioned as of the article date, no plans to initiate any positions within the next 48 hours, and no business relationship with any company whose stock is mentioned in this article. IPO stocks can be very volatile in the days immediately after an IPO. Information provided is for educational purposes only, may be in error, incomplete or out of date, and does not constitute financial, legal, or investment advice. Past performance is no guarantee of future results.)

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