Under WSA’s IPO Scanner: Myovant Sciences Ltd.

Myovant raised $218 million in its IPO on October 27th, 2016

The U.S. IPO market has so far witnessed 96 IPOs being priced, raising a total of $17.2 billion as of November 6th, 2016. So far in Q4 FY16, the U.S. market has witnessed 21 IPOs being priced, raising roughly $4.9 billion. As of November 6th, 2016, 110 IPOs have been filed, of which 9 have been filed in Q4 FY16. Of the total IPOs priced as of November 6th, 2016, Healthcare accounted for 45 deals, or 41% of the total number of IPOs, raising proceeds of $3.7 billion, followed by Technology with 24%, or 26 deals raising $4.3 billion.

Source: Renaissance Capital
Source: Renaissance Capital

The IPO market has averaged at about 10 deals per month since April 2016. The pace of IPO pricings is expected to increase in Q4 FY16, putting the year on track to over 100 IPOs. IPO activity is expected to be the highest in September and October 2016, followed by narrower windows of opportunity around the US presidential election and the holiday season.

Company overview

m2Myovant Sciences Ltd., founded by 31-year-old Vivek Ramaswamy in February 2016, is based in Hamilton, Bermuda, and has facilities in Basel, Switzerland, and Brisbane, California. Myovant is a clinical-stage biopharmaceutical company focused on developing and commercializing innovative therapies for women’s health diseases and other endocrine-related disorders, including advanced prostate cancer.

Myovant’s lead product is a novel gonadotropin-releasing hormone (GnRH) receptor antagonist, Relugolix, which is in mid-stage trials for uterine fibroids, endometriosis, and prostate cancer. Myovant plans to initiate three multinational Phase 3 clinical programs for Relugolix, one in women with heavy menstrual bleeding associated with uterine fibroids, a second in women with endometriosis-associated pain, and a third in men with advanced prostate cancer.

Its second product candidate is RVT-602, an oligopeptide kisspeptin analog, for the treatment of female infertility as part of assisted reproduction. Kisspeptin is a naturally occurring peptide that stimulates GnRH release which, in turn stimulates the release of certain hormones that play a key role in egg maturation. The company says it may be a safer alternative to human chorionic gonadotropin when used to treat female infertility.

Both drug candidates were in-licensed from Japan-based Takeda Pharmaceuticals in exchange for 12% of Myovant’s shares and an agreement to pay a high single-digit royalty on future drug sales. Takeda, however, has retained domestic rights for Relugolix and will report pivotal data on the compound in early 2017. Myovant is not developing the treatments in-house; rather it is outsourcing most of the development to R&D company, Roivant Sciences, which owns an 85.4% stake in Myovant.

Source: Myovant
Source: Myovant

In a recent development, Pfizer Inc. (NYSE: PFE) and BB Biotech AG have expressed interest in purchasing $30 million each in Myovant’s IPO. Pfizer has also obtained a right of first negotiation with Myovant with respect to any transaction that would propose to a third-party the license or sale of rights to develop and commercialize Relugolix or RVT-602. Also, Pfizer would have the right of first negotiation with Myovant with respect to a change of control of Myovant for the sale or disposition of all or substantially all of its assets. Myovant’s Relugolix is seen to be a good fit for Pfizer’s prostate cancer drug program.

Financial highlights

For the three-month period that ended June 30th, 2016, Myovant reported net losses of $18.97 million. It had assets totaling $0.52 million and an accumulated deficit of $20.62 million. After its IPO, Roivant Sciences will hold about 64% stake, with Takeda holding a 12% stake in Myovant.

Myovant has several risk factors since it has a very short operational history and has accumulated substantial losses in a short period of time. It also is entirely dependent on outside entities for its drug development for lead candidate product. Additionally, Myovant faces potential competition from AbbVie Inc. (NYSE: ABBV), which has a similar molecule in advanced Phase 3 clinical trials. It also identifies ObsEva S.A. as another competitor. ObsEva has an oral candidate in Phase 2 clinical trials for the treatment of uterine fibroids.

IPO details

m4On October 27th, 2016, Myovant announced the pricing of its IPO of 14,500,000 common shares at a price of $15.00 per share. The common shares of Myovant Sciences have been approved for listing on the New York Stock Exchange and began trading under the ticker symbol “MYOV” on October 27th, 2016. All of the common shares are being offered by Myovant. In addition, Myovant has granted the underwriters a 30-day option to purchase up to 2,175,000 additional common shares.

Citigroup Global Markets Inc., Cowen and Company LLC, Evercore Group LLC, and Barclays Capital Inc. acted as joint book-running managers for the offering. JMP Securities LLC was the lead manager and Robert W. Baird & Co. Inc. was the co-manager for the offering.

Myovant raised $218 million in its IPO and will use the cash to advance three simultaneous Phase 3 programs for its lead prostate cancer drug Relugolix. The trials are slated to start in early 2017. Based on its IPO proceeds, Myovant is now valued at around $900 million.

Key developments

On October 12th, 2016, Myovant announced the appointment of its board of directors, comprised of biopharmaceutical and healthcare industry veterans. Dr. Lynn Seely, who has been appointed the M.D., President, and CEO of Myovant, is an endocrinologist with over 20 years of drug development experience and biopharmaceutical company leadership. Before joining Myovant, she was the chief medical officer of Medivation Inc. and led the development of Xtandi, a hugely successful prostate cancer drug with $2 billion in annual sales. In order to acquire Xtandi, Pfizer in September 2016 acquired Medivation for $14 billion.

Kathleen Sebelius, the former U.S. Secretary of the Department of Health and Human Services, has joined Myovant’s board. She has presided over 11 operating divisions, including the Centers for Disease Control and Prevention, the Food and Drug Administration, and the National Institutes of Health and oversaw the passage and implementation of the Affordable Care Act. Before that, she served as Governor of Kansas.

Also joining the board of directors is Wayne S. DeVeydt, who previously served as the Executive Vice President and CEO at health insurance company Anthem Inc. (NYSE: ANTM). Another pharmaceutical industry veteran joining Myovant’s board is Mark Altmeyer, who is the President and Chief Commercial Officer for Axovant Sciences Inc. (NYSE: AXON).

Dr. Keith Manchester, Managing Director and Head of Life Sciences for QVT Financial LP, has also joined the board of Myovant. Dr. Manchester focuses on investments in both publicly-traded and privately-owned life sciences companies. Prior to that, he was Director of business development at Applied Molecular Evolution Inc., a biotechnology company. Also among the board members is Vivek Ramaswamy, the founder and CEO of Roivant Sciences Inc., and CEO of Axovant Sciences Inc. Prior to founding Roivant, Ramaswamy was an investor in the biotechnology sector.

Myovant’s R&D facility is currently under construction in San Francisco, where it has just nine employees on its rolls. The Company is planning to rapidly expand its manpower over the next few months in a scale-up to its Phase 3 clinical trials for Relugolix.

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