Genentech-partnered AC Immune tees up $68M IPO to bankroll Alzheimer's R&D

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AC Immune has set the terms for its long-mooted Nasdaq IPO. The Alzheimer’s specialist, which lists Biogen ($BIIB), Genentech and Johnson & Johnson ($JNJ) among its partners, is looking to raise as much as $68 million (€61 million), the bulk of which will go into the development of an unpartnered early-phase liposomal therapeutic vaccine.

Lausanne, Switzerland-based AC Immune is looking to sell 4.5 million shares--plus an overallotment of just shy of 700,000 shares--for between $11 and $13 a pop. If AC Immune sells all the shares at the top of its target range, it will gross $68 million. Equally, once fees are taken out, hitting the midpoint of the range and only selling the initial allotment would leave AC Immune with $47 million, a sum that would see it exit the IPO with close to $100 million to invest in its pipeline.

With Roche’s ($RHHBY) Genentech picking up the tab for development of crenezumab, an Alzheimer’s drug that failed a Phase II trial but advanced into Phase III nonetheless, AC Immune needs the money for some of its less closely watched programs. AC Immune has earmarked $10 million to co-fund the development of a tau vaccine with J&J. And a further $5 million is set aside to cover some of AC Immune’s anti-tau antibody and PET tracer work.

That leaves the lion’s share of the anticipated post-IPO cash haul for the development of in-house programs. Most notably, AC Immune plans to spend $65 million on ACI-24, the aforementioned liposomal therapeutic vaccine. AC Immune is developing the vaccine to treat Alzheimer’s in people with Down syndrome, a group who develop Alzheimer’s-like characteristics in larger numbers and at younger ages than the general population.

AC Immune thinks it can improve outcomes in this subpopulation by using an active immunotherapy to target abeta, which is thought to accumulate in people with Down syndrome because they have an extra copy of chromosome 21. The $65 million will enable AC Immune to complete a Phase I/IIa trial and a planned Phase IIb study in Alzheimer’s, while also advancing its Down-focused program into Phase II.

Exactly how far AC Immune gets on the back of its IPO funds--and how much it can spend on R&D in Parkinson’s, glaucoma and other indications--will depend on its ability to persuade investors it is a risk worth taking. With crenezumab entering Phase III on the strength of less-than-stellar data, there is a real risk it will join the list of Alzheimer’s drugs that fell flat at the final hurdle. In an IPO market that has given short shrift to almost everything bar CRISPR stocks, AC Immune could be a tough sell.

In its favor, AC Immune has the luster imparted by three Big Biopharma partnerships and, perhaps more importantly, existing investors who have committed to snapping up $30 million of the IPO shares. At the midpoint of the price range, that commitment means AC Immune is more than halfway to selling out the IPO before it has persuaded a single new investor to participate. Dievini Hopp BioTech, a fund run by billionaire Dietmar Hopp, owns 36.5% of AC Immune today.