VANCOUVER — When Victoria-based Eupraxia Pharmaceuticals completed its initial public offering last month, it was the first Canadian biotech company in 18 years to list its shares solely on the Toronto Stock Exchange. Despite the nearly two-decade long drought, Eupraxia’s founders believed Canada’s investor community would support its offering. Canadian investors and the government had already bought in—to the tune of tens of millions of dollars—to the company’s technology, which offers a way to deliver drugs to a specific spot in the body and release them slowly.
“Sure enough, we found that our story resonated, that people understood both our lead asset, as well as the platform potential that we had,” said chief executive and co-founder James Helliwell in an interview with The Logic, his first since taking the company public. That support came, even though “at the time we were doing the IPO, the market itself was having a few little hiccups.”
Helliwell believes that timing is why the company raised $9 million less than initially planned, but still enough to fund a human trial for its technology’s lead candidate: a treatment that offers relief for knee pain from osteoarthritis.
Talking Point
Eupraxia’s initial public offering last month marked the first time in 18 years that a Canadian biotech company listed its shares solely on the Toronto Stock Exchange. In their first interviews since going public, the company’s founders said they believed the loyalty the company had seen from investors and the Canadian government would translate to success in the capital markets. Though they downsized by $9 million, they raised enough to pursue an FDA-approved human trial for a slow-release, targeted therapy for osteoarthritis-related knee pain.
Eupraxia first filed for a $50-million offering in early February. It expected to price up to roughly 5.6 million shares at between $9 and $11 each. Some eight years into developing its drug-delivery platform, the company had made a lot of progress with its osteoarthritis treatment. The U.S. Food and Drug Administration had approved a large human trial. “It really seemed like the appropriate moment to be able to both access and get interest from the capital markets,” said Helliwell, explaining the company would be able to provide a timeline for when it would produce some significant data. It would also be able to use the capital raised effectively not only to drive development of the osteoarthritis therapy forward, but also its overall technology.
“This is fundamentally a technological platform where the lead asset is a great example of how we can modify drugs,” he said. When people take a drug orally or through an injection, the dose arrives right away and then disappears. “What you’re always doing is overdosing, underdosing, overdosing, underdosing,” he said. Eupraxia’s technology lets drugs be released over time in a specific part of the body. The company developed what Helliwell compares to little balloons, each the size of a grain of sand. For the osteoarthritis treatment, “we package the steroids in these little balloons that are very gently injected into the knee and then they slowly deliver the drug in a flat, steady fashion over a long period of time.” While that drug can find uses outside of the human body—Helliwell anticipates treatments for our canine and equine friends—the technology can be used for other drugs. “You may have a drug that you want to last two weeks, or a drug that you want to last one year from a single dose, and we have the flexibility in our platform to be able to design for that.”
Private investors bought into the company’s vision early on, as did the government. Founded in 2012, Eupraxia raised roughly $45.4 million from grants and high-net-worth individuals before its IPO, according to its filings. It received nearly $7.7 million from the National Research Council’s Industrial Research Assistance Program and the scientific research and experimental development tax credit.
Kevin De Sousa, who lives in Toronto, became an early investor in 2013 after his friend, a Eupraxia board member he declined to name, approached him and several others. He met Helliwell, who impressed him as a trustworthy, intelligent person, and saw the possible market opportunity for Eupraxia’s platform. It was De Sousa’s first private investment, and he participated in several future rounds. “Here’s something that sounds like it’s a very reasonable, sensible business proposition by somebody that I think I can trust,” he said.
That ongoing support from the government and the company’s Canadian investors led it to believe a sole TSX listing would be the right play. In biotech, everything always costs more and takes longer than one thinks, said Amanda Malone, the company’s chief scientific officer and co-founder. “And they have been just amazingly supportive and patient with us and continuing to step up and help.” The company decided it didn’t want to be a local brain or money drain. “We wanted to give Canada the opportunity to kind of participate in this next stage for us,” she said.
Amanda Malone, left, is the company’s chief scientific officer, and James Helliwell, right, is the chief executive officer. The duo co-founded the company, which went public last month. Photo: Eupraxia
But some of that optimism waned less than a month later. On March 3, the company downsized its offering to a $41-million raise, with up to about 5.1 million units offered at $8 each. Each unit made up a common share and a warrant share that allows investors to purchase a common share in the company at $11.20 five years from the closing of the initial offering.
As the company was doing the marketing push for its offering, the biotech subindex started dropping, said Helliwell. The TSX capped health-care index had been rising since the start of the year, reaching a peak of $114.83 on Feb. 10 before starting to fall. It closed at $71.49 Thursday. Malone called it “a moment of uncertainty in the market,” of which its IPO timing was a little bit at the whim. The company “tried to reflect that we acknowledged the market conditions were more volatile and changing,” said Helliwell, and priced the offering accordingly. “That was effective at keeping those key institutional investors.”
In the end, the $41 million raised will be enough to get the data from the trial and drive shareholder value, said Malone. Eupraxia anticipates data from the trial will come out in the second half of next year, and projects the company will submit the treatment for FDA approval in the latter half of 2025. In the meantime, it will “very aggressively” pursue animal applications for the drug, especially in dogs and horses, said Helliwell, and conduct more research to see whether it can move into oncology and help slow tumour growth and improve patient quality of life.
With its long timelines, the company is not yet profitable, though its losses are narrowing. In its most recent financial year, which ended Dec. 31, 2020, the company reported a net loss of about $4 million—down from around $7.2 million the previous year, according to its financial filings.
Before its osteoarthritis treatment potentially reaches clinical use, Eupraxia has made or intends to make money in two ways: accessing capital markets and through partnerships with other companies. These partnerships could be with companies that license Eupraxia’s products or that need Eupraxia’s technology to overcome safety or other delivery issues for a drug they’ve developed. “So we can actually develop partnerships that bring in both short-term revenue and provide really long-term reward for co-developing drugs with other companies.”
There’s still the possibility the company will list on another exchange outside of Canada. “As we build out our technological platform and access the U.S. markets more, it wouldn’t be unexpected for us to have a dual listing,” said Helliwell, who declined to provide a timeline.
