Oncobiologics looks to a $115M IPO to back its biosimilars business

Oncobiologics CEO Pankaj Mohan

Oncobiologics CEO Pankaj Mohan is turning to a turbulent public market to provide the next big injection of cash that will be needed to keep his knockoffs of Humira and Avastin on their Phase III development schedules. The Cranbury, NJ-based biotech filed for a $115 million IPO at the end of last week, jumping into a queue of companies anxiously awaiting an update on investors' appetite for new offerings from the drug development field.

Mohan told FierceBiotech last July that a $31 million private fundraising had broken the "sound barrier" for the company. He was hoping to raise the company's profile at a critical juncture, ahead of a second step that would be needed to raise up to $90 million to complete a late-stage study.

Oncobiologics' SEC filing listed two drugs that have wrapped Phase I, putting them on the threshold of a Phase III to convince regulators that they were just as good as the originals: ONS-3010 (Humira, or adalimumab) and ONS-1045 (Avastin, or bevacizumab). Six more drugs are in preclinical development.

The biotech is unusual in many ways. The biosimilars business is dominated by global players like Novartis ($NVS), Amgen ($AMGN), Pfizer ($PFE), Boehringer Ingelheim and Samsung Bioepis, a joint venture with Biogen ($BIIB). Over the weekend Bioepis won European approval to sell its copy of Enbrel, just four years after the company was set up. Some smaller outfits like Momenta Pharmaceuticals ($MNTA), Coherus ($CHRS) and Celltrion have also been busy in the biosimilars business.

To play against those rivals, the upstart will require a hefty infusion of cash, promising investors that a small, nimble group like his can pull off an end run against the major league competition. At the end of last September, Oncobiologics counted $9.1 million in cash after burning through $94 million in development costs, with $14 million in loans due on demand. And CEO Mohan, who's listed with a controlling 53% ownership stake in the company, says that a Phase III can run anywhere from $70 million to $90 million.

The company believes that the stakes are worth the risks, citing $1.4 billion in biosimilar revenue for antibody copies for last year against projected revenue of $56 billion in 2030. But with generalist investors generally sitting out of the biotech IPO market after three years of big gains, a success here faces some tough odds. 

Apart from the private funding that it has raised, Oncobiologics has garnered $23 million in collaboration deals for ex-U.S. and European markets, centering on India, China and Mexico. And it's trying to rework a deal that gives Zhejiang Huahai Pharmaceutical a joint participation in the U.S. on 3010 in order to keep the biggest pharma market for itself.

- here's the filing