Quick Take

Greenwich LifeSciences (GLSI) has filed to raise $23.5 million in an IPO of its common stock, according to an S-1 registration statement.

The firm is developing an immunotherapy designed to prevent the recurrence of breast cancer.

GLSI is preparing to enter Phase 3 trials in 2020 for its sole candidate.

I’ll provide a final opinion when we learn management’s pricing and valuation assumptions for the IPO.

Company & Technology

Stafford, Texas-based Greenwich was founded to develop an adjuvant therapy for patients with HER2/neu 3+ breast cancer in conjunction with Herceptin.

Management is headed by Mr. Snehal Patel, who has been with the firm since 2010 and was previously a consultant to various biotech companies and worked in operations and business development at Bayer (OTCPK:BAYRY).

Below is a brief overview video of HER2+ breast cancer:

Source: Breast Cancer School for Patients

The firm’s only drug candidate is GP2, and in a Phase 2b trial that was completed in 2018, there were no recurrences in the HER/2neu 3+adjuvant setting after a median of five years after specified treatment.Management intends to begin Phase 3 trials in 2020.

Investors in the firm have invested at least $25.8 million and include various individual investors including the CEO.

Market & Competition

According to a 2017 market research report by GlobalData UK, the market for HER2-positive breast cancer was an estimated $6.4 billion in 2015 and is expected to reach $9.9 billion by 2025.

This represents a forecast CAGR (Compound Annual Growth Rate) of 4.4% from 2015 to 2025.

Key elements driving this expected growth are the introduction of a first line treatment by Roche (Perjeta) and other treatments as well as an increase in incidence due to the world’s aging female population.

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Major competitive vendors that provide or are developing treatments include:

Management says it believes its drug ‘will act synergistically with Herceptin, Perjeta, Nelynx, Kadcyla and Enhertu.’

Financial Status

Greenwich’s recent financial results are typical of a mid-stage biopharma in that they feature no revenue and various R&D and G&A costs, although those costs are unusually low for a nearly Phase 3 stage firm.

Below are the company’s financial results for the past two and ¼ years (Audited PCAOB for full years):

Source: Company registration statement

As of March 31, 2020, the company had $6,835 in cash and $1.4 million in total liabilities. (Unaudited, interim)

IPO Details

Greenwich intends to raise $23.5 million in gross proceeds from an IPO of its common stock, although the final amount may be different.

Also, certain selling shareholders may seek to offer shares totaling 4.5 million shares along with the IPO.

Management says it will use the net proceeds from the IPO as follows:

to complete the manufacturing of our product candidate, GP2;to enroll and treat the first 50 to 100 patients in our Phase III clinical trial; andfor working capital and other general corporate purposes.Any additional capital that we raise pursuant to this offering will be used for the enrollment of additional patients in our Phase III clinical trial, for the retention of CROs to conduct clinical trials, and for additional working capital and other general corporate purposes.

Management’s presentation of the company roadshow is not available.

The sole listed bookrunner of the IPO is Aegis Capital Corp.

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Greenwich is seeking funding to push its only drug through Phase 3 trials.

There have been little R&D and G&A costs in recent years. The firm will perform none of the trial activity, rather it will be outsourcing that to CROs, which is a little unusual for a standard biotech firm.

The firm’s only candidate, GP2, has been licensed from the Henry Jackson Foundation [HJF], who handled early stage trials.

GLSI’s license agreement may be terminated by HJF if it does ‘not make required payments, if we default on our performance obligations, if we do not sufficiently develop and advance GP2 towards commercialization, and for various other reasons.’

The company was the ‘financial and corporate sponsors of the GP2 Phase IIb clinical trial,’ so the firm has some ‘skin in the game’ with the drug.

The market opportunity for breast cancer treatment is large and expected to grow at a moderate rate over the coming years.

Management hasn’t disclosed any research or commercial collaborations with major pharma firms.

When we learn more details about the IPO, I’ll provide an update.

Expected IPO Pricing Date: To be announced.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.

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