Septerna just entered the clinic, and its lack of human data makes it an outlier among the companies able to successfully go public this year in what is still a cautious biotech IPO market. What the young company does have is technology based on research from a Nobel laureate and a lead drug candidate that could offer a key advantage over other treatments for a rare, inherited disease. Now it has $288 million in IPO cash to support its pipeline.
Late Thursday, Septerna priced its offering of 16 million shares at $18 apiece, going beyond the preliminary financial terms it previously set. Those shares will trade on the Nasdaq under the stock symbol “SEPN.”
South San Francisco-based Septerna will use most of the IPO proceeds to continue clinical testing of SEP-786 for hypoparathyroidism, an inherited deficiency of parathyroid hormone (PTH). This hormone regulates calcium and phosphate levels in the blood. Lacking this hormone leads to fatigue, brain fog, and muscle weakness. In more severe cases, patients can develop cardiovascular problems and renal failure.
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Standard hypoparathyroidism treatment includes calcium and vitamin D supplements, which do not address all of the disease’s symptoms. Takeda Pharmaceutical’s Natpara, an engineered version of parathyroid hormone, will cease production by the end of the year due to manufacturing issues. In August, the FDA approved Ascendis Pharma’s Yorvipath, the first in what could be wave of new injectable peptide hypoparathyroidism drugs. Septerna takes a different approach to the disease with SEP-786, a small molecule that targets and activates the parathyroid hormone 1 receptor (PTH1R), sparking it to produce more of the key hormone. As an oral drug, SEP-786 would offer patients less burdensome dosing.
“Hormone replacement with injectable PTH peptides, either marketed or in clinical development, may improve blood chemistry profiles of patients via PTH1R activation but will require lifelong daily injections,” Septerna said in the IPO filing. “We believe there is a substantial opportunity for an oral small molecule therapy that offers convenience, improved compliance, and potentially superior efficacy.”
PTH1R is a G protein coupled-receptor (GPCR), part of a family of receptors that regulate a wide range of physiological processes. The role of these receptors in both health and disease is known, and many of them are targeted by FDA-approved drugs. However, an estimated 75% of GPCR targets remain undrugged, Septerna said in the filing. Septerna’s platform technology enables scientists to isolate a GPCR and study it outside of a cell, but in a way that replicates what happens to that receptor inside a cell. With this greater understanding of GPCRs, the company designs, screens for, and optimizes small molecules that target the receptors. This technology platform, called Native Complex, is based on the research of Robert Lefkowitz, a Duke University professor of biochemistry and chemistry who was awarded the 2012 Nobel Prize in Chemistry for his work in the GPCR field.
In animal tests, Septerna reported its small molecule agonists activated PTH1R and regulated key genes important for calcium homeostasis in manner similar to native parathyroid hormone. A placebo-controlled Phase 1 study will evaluate the safety and tolerability of once-daily and twice-daily dosing of the SEP-786 in healthy volunteers. The first patient was dosed last month. Preliminary data are expected in mid-2025.
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The Septerna pipeline includes two preclinical negative allosteric modulators. SEP-631 is in development for immunology and inflammation indications, such as the skin disease chronic spontaneous urticaria. TSHR has potential applications in endocrinology.
Native Complex has also yielded small molecule agonists of the GLP-1, GIP, and glucagon receptors for the potential treatment of metabolic disorders. An oral Septerna drug that hits one or more of these receptors could put the biotech in competition with commercialized injectable peptide drugs, such as Eli Lilly’s Zepbound and Novo Nordisk’s Wegovy. But Septerna will likely aim to stand out from the next wave of metabolic medications in development as pills. This competition includes Structure Therapeutics, whose small molecules come from its own GPCR platform technology (when Structure went public last year, it snagged the fitting stock symbol “GPCR”). Lead Structure drug candidate GSBR-1290 is currently in mid-stage clinical development for type 2 diabetes and obesity.
Since Septerna’s inception in 2019, the company had raised $224.2 million prior to the IPO, most recently a $150 million Series B round last year led by RA Capital Management. That firm holds a 7.7% post-IPO stake in Septerna, according to the prospectus. Third Rock Ventures is Septerna’s largest shareholder with a 23.6% post-IPO stake. Septerna is led by CEO Jeff Finer, who is also a venture partner at Third Rock.
Septerna’s plans resonated with investors, whose interest in the biotech’s stock enabled the company to boost the IPO size twice. In preliminary financial terms set at the beginning of the week, Septerna planned to offer more than 10.9 million shares in the range of $15 to $17 each, which would have raised $175 million at the pricing midpoint. On Thursday, the biotech boosted the deal size to more than 15.2 million shares priced at $18 apiece, which would have raised $275 million at the pricing midpoint. Late Thursday, the biotech again revised the terms upward, boosting the deal to $288 million.
As of the end of the second quarter of this year, Septerna reported its cash position was $155.7 million. Following the IPO, the company plans to spend $54 million to advance lead drug candidate SEP-786 through Phase 2 testing in hypoparathyroidism, according to the filing. The company also plans to use the capital to develop additional molecules that target the parathyroid hormone receptor. Another $24 million will support the completion of Phase 1 testing of SEP-631 and additional molecule inhibitors that could be potential treatments for chronic spontaneous urticaria. And $41 million is set aside for other R&D, including Septerna’s TSHR and incretin receptor programs.
