BioWorld Today Contributing Writer

Clovis Oncology Inc. filed on Thursday for an initial public offering (IPO) worth up to $149.5 million, making it the largest biotech IPO currently in the queue, and dwarfing others that have commenced trading in 2011.

Clovis has built its business by acquiring and developing oncology candidates based on a belief that discovery productivity exceeds development capacity in the field of oncology. The company expects the proceeds from the offering to fund operations for about 12 months, supporting clinical trials of drugs for metastatic pancreatic cancer, various solid tumors and non-small-cell lung cancer.

The next largest offering in the IPO queue, Supernus Pharmaceuticals Inc., was filed for a value of $100 million. If it prices and trades for its full value, Clovis's IPO would by far exceed all other biotech IPOs that commenced trading in 2011, and it would be the largest single IPO since Pacific Biosciences Inc., which commenced trading in October 2010 at $16 a share, and grossed $200 million. (See BioWorld Today, Oct. 28, 2010.)

Pacific Biosciences, however, is a sequencing company, and its hefty IPO valuation was not considered a sign of things to come for development-stage biotech companies, which are almost always burning cash rapidly when they debut on the stock market.

Clovis, a pure play biotech company, which reported a net loss of just over $63 million as of March 31, reported a deficit to its stockholders of another $63 million.

It will be courting investors solely on the basis of future profits from its pipeline drugs, not for any technology platform product or contract research service. That makes it a much better signifier for the success of the current biotech IPO window.

Other biotechs in the IPO queue include BioLineRx Ltd., Clarus Therapeutics Inc., Cutanea Life Sciences Inc., Horizon Pharma Inc., Insys Therapeutics Inc. and NewLink Genetics Corp.

Among companies that have begun trading in 2011, Endocyte Inc. and Sagent Pharmaceuticals Inc. raised the largest sums.

In February, Endocyte sold 14.375 million shares, netting $78.8 million. The market has been good to Endocyte, nearly doubling its share price (NASDAQ:ECYT) to $11.93 by June 23.

Specialty pharma Sagent has fared well, too. It sold 6,612,500 shares at $16 apiece in April, and its shares (NASDAQ:SGNT) are currently trading at $28.11.

The success of smaller IPOs may suggest that things are finally warming up for biotech IPOs. Of late, merger and acquisition has been a heavily favored exit for small biotech, with IPOs seeming almost like an option of last resort. Now Clovis is jumping in.

Clovis' pipeline includes three major drug candidates, which it acquired through licensing agreements with other companies.

In November 2009, it licensed CO-101, a pancreatic cancer candidate from Clavis Pharma ASA for $15 million up front, and amended the agreement the following year with another $10 million for territory expansion. The deal includes up to $115 million in additional payments to Clavis in clinical and regulatory milestones and up to $445 million in sales milestones.

CO-101 is a lipid-conjugated form of gemcitabine currently in a pivotal clinical trial for first-line metastatic pancreatic cancer. It is designed to attack tumors that have low expression levels of a the hENT1 membrane transporter protein, making them resistant to standard gemcitabine.

Clovis's non-small-cell lung cancer candidate, CO-1686 was acquired in a 2010 license agreement with Avila Therapeutic Inc. as part of a broader agreement to develop and commercialize covalent inhibitors of mutant forms of EGFR. Clovis paid $2 million up front to Avila and may owe up to $119 million in development and regulatory milestones, plus $120 million in sales milestones. Avila is also entitled to royalties on net sales of the product.

CO-1686 targets EGFR mutations in addition to T790M, which Clovis said makes it a good candidate for first- and second-line NSCLC. The drug is in preclinical development with a planned IND filing date in the first quarter of 2012.

Recently, Clovis acquired CO-338, a PARP inhibitor, from Pfizer Inc. for an up-front payment in the form of a $7 million convertible promissory note due 2012. The drug is in development for solid tumors. Potential milestone payments include $259 million, and Pfizer, as well, is entitled to royalties. (See BioWorld Today, June 6, 2011.)

CO-338 is in a Phase I trial in combination with platinum chemotherapy for solid tumors. There are also two investigator-initiated trials under way in BRCA mutant breast/ovarian cancer and in BRCA mutant triple-negative breast cancer.