Tokai pockets $97M in IPO cash to get its cancer drug into Phase III

Cambridge, MA, biotech Tokai Pharmaceuticals ($TKAI) pulled off a $97.2 million Wall Street debut, raising the money it needs to get its three-in-one treatment for prostate cancer into late-stage development.

The company moved about 6.5 million shares at $15 each, earmarking another 972,000 shares for its underwriters and lining up for a maximum fundraise of nearly $112 million if all goes according to plan.

All that cash will support galeterone, a combination prostate cancer treatment that won the FDA's coveted fast-track designation. The drug is currently in a Phase II trial on 144 patients with castration-resistant prostate cancer, interim data from which revealed that galeterone charted clinically meaningful reductions in prostate-specific antigen, a common biomarker used to track patient response.

Next Tokai intends to kick off a late-stage study in the first half of 2015, targeting patients who aren't getting effective treatment from the banner prostate cancer treatments approved over the past few years.

Tokai's pitch is that galeterone provides a best-of-all-worlds approach to fighting prostate cancer, marrying the mechanisms of action found in Johnson & Johnson's ($JNJ) Zytiga and Astellas and Medivation's ($MDVN) Xtandi.

In order to grow, prostate tumors need the hormones testosterone and dihydrotestosterone (DHT) to bind to androgen receptors. To disrupt that process, J&J's drug inhibits the enzyme CYP17 and thereby reduces testosterone synthesis, while Xtandi works from the other direction as an androgen receptor antagonist, blocking the necessary binding and starving tumors. Tokai's drug does both, combining those two mechanisms and adding a third: androgen receptor degradation, which the company believes can lower the risk of treatment resistance.

Zytiga and Xtandi hauled in a combined $2.1 billion for their makers last year, and Tokai believes its contender can compete for a share of that growing market.

And investors would seem to agree, as Tokai's shares rocketed up more than 80% in its first morning of trading, soaring over $25 each by mid-morning.

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