Perth biotech PYC Therapeutics launches monster $653 million equity raising to advance drug portfolio

PYC Therapeutics boss Rohan Hockings is hoping to strike while the iron is hot with a monster $600 million equity raising to advance a pipeline of drugs aimed at treating rare genetic diseases out to 2030. The Perth biotech entered a trading halt on Monday to announce the $653m raising — which represents nearly two-thirds of its existing market capitalisation of $933m — priced at $1.50 a share, or a 6.3 per cent discount to Friday’s closing price. It is supported by binding commitments for $560m of new shares. PYC said the proceeds would fully fund the company until 2030 for clinical trials. And with human efficacy data expected within the next 24 to 36 months for its suite of RNA-based drugs, Dr Hockings said now was the right time to tap investors. “(The human data is) the part that really moves the needle for everybody,” he told The West Australian on Monday. The Nedlands-based company is developing four drugs to treat rare genetic diseases, including retinitis pigmentosa — a degenerative eye disease considered to be the leading cause of childhood blindness — as well as polycystic kidney disease. It is also developing a drug for Phelan-McDermid syndrome — a severe neurodevelopmental disorder that affects development, speech and behaviour — and a second rare eye disease, autosomal dominant optic atrophy. “What we wanted to do was really strengthen that balance sheet . . . to really fund the ambition of all four programs into late-stage trials on the back of good human efficacy data that’s coming,” Dr Hockings said. At the same time, he said the tide was turning for the life sciences industry. “It’s been a pretty bleak time in life sciences and the sentiment . . . is definitely better. There is more available capital,” Dr Hockings said. “We were funded into the middle of next year and it was the time when you start to (think), ‘Alright well what comes after that horizon’.” PYC said the raising comprised of $128m placement of 85.5 million shares to new US life sciences investors shares including Perceptive Advisors, Driehaus Capital Management, MPM BioImpact, Rock Springs Capital and RTW Investments, and a $525m, three-for-five rights issue for existing shareholders. The raising comes barely five months after Dr Hockings emerged from a boardroom dispute that resulted in his sudden resignation and then-chair Alan Tribe taking on day-to-day management of the biotech, where he is also the biggest shareholder with a 32 per cent stake. In a bizarre turn of events, PYC on September 17 announced Dr Hockings’ sudden resignation, wiping nearly $200m off the company’s value, only to announce his return just five days later. Shareholders were left in the dark over the circumstances behind the about-face until three weeks later when Dr Hockings blamed the episode on a difference of opinion with directors pushing a proposed change of strategy that, he said, would have prioritised PYC’s most advanced projects at the expense of others to deliver quicker returns. While Dr Hockings did not detail the source of the disagreement over strategy, the company’s statement on his reappointment also disclosed the departure of its two US directors, Michael Rosenblatt and Jason Haddock, and the appointment to the PYC board of renowned Perth ophthalmologist Ian Constable. Two months later, Mr Tribe — best known as the former owner of the Ikea franchises in WA and South Australia — was replaced by former Woodside Energy chief executive Peter Coleman. Asked if PYC had moved on from the board implosion, Dr Hockings on Monday said the company was now very-much aligned. “We’ve undergone extensive changes and set the company up for the future,” he said. “The roadmap is out there, we’ve got the balance sheet to fund it.” Over the past year, PYC shares have jumped 31 per cent to $1.60, nearing its goal of reaching $1 billion in valuation. “The really nice thing here is the US specialist life sciences investors arriving and I think that is a very strong validatory indicator for the quality of the science that our team has put together,” Dr Hockings said. PYC is progressing its drugs for retinitis pigmentosa and ADOA through repeat dose studies and onto registrational trials. Its drug for polycystic kidney disease is progressing through a single-dose study in patients, while its Phelan-McDermid syndrome treatment is slated for first-in-human trials next year.