Centessa Pharmaceuticals plc    CNTA   $18.00-$20.00 15.0 million ADSs Underwriters: Morgan Stanley, Goldman Sachs, Jefferies, Evercore ISI   Co-Managers:  Proposed trade date of 5/28 They are reimagining the traditional pharmaceutical research and development model to build, from the bottom-up, an R&D engine predicated on asset centricity to discover, develop and ultimately deliver impactful medicines to patients.

Centessa Pharmaceuticals plc    CNTA

•  15,000,000 ADSs to be offered between $18.00 and $20.00 per ADS
• Underwriters: Morgan Stanley, Goldman Sachs, Jefferies, Evercore ISI Co-Managers:
• Proposed trade date of 5/28
• Rating = 3

Click here to view the prospectus.

https://www.sec.gov/Archives/edgar/data/1847903/000119312521170068/d123754ds1a.htm

Company Overview

Centessa Pharmaceuticals plc (Centessa) was conceived by combining the primary strengths of the asset-centric model with the benefits of diversification and scale typically attributed to traditional large R&D organizations. The asset-centric model refers to single-purpose companies which are focused on developing a single program or programs associated with a single biological pathway. They were inspired by the success realized by the asset-centric model and were founded on the principle of developing asset centricity at scale. They have implemented this reimagined approach to R&D by initially combining a curated portfolio of ten wholly-owned asset-centric companies, which they refer to as the Centessa Subsidiaries, which are developing 16 high conviction programs with clear biological rationale. Each Centessa Subsidiary is led by one or more individuals whom they believe to be some of the leading subject matter experts in their respective disciplines. They empower their subsidiaries to advance their research and development plans in an independent and unbiased manner. Their programs cover a range of high-value therapeutic areas including oncology, hematology, immunology / inflammation, neuroscience, hepatology, pulmonology, nephrology, and range from discovery-stage research through late-stage clinical development. Additionally, a substantial number of their programs focus on rare disease indications with significant unmet need. They currently anticipate a total of more than a dozen clinical read-outs over the next three years, including three clinical read-outs in 2021. They expect this robust cadence of clinical progress will be coupled with significant development advancements for their earlier-stage preclinical programs. As a therapeutic-focused company, they intend to pursue a “develop to commercialize” approach for their programs with a relentless focus on efficiently delivering consequential medicines to patients.

Centessa was formed in October 2020 by Medicxi with a view to ultimately acquiring, and thereby becoming the holding company of, several pre-revenue, development stage biotech companies each of which was either controlled by and/or invested in by a fund affiliated with Medicxi or Index Ventures. On January 29, 2021, Centessa acquired 11 biotechnology companies and simultaneously closed a Series A funding round of $250 million. Prior to the acquisition, Centessa’s activities were limited mainly to engaging advisors and recruitment efforts. Centessa commenced active operations after the consummation of the acquisitions. Each of the Centessa Subsidiaries was a portfolio company of a fund affiliated with Medicxi or Index Ventures at the time of the acquisition.

They are led by their experienced management team who play a critical role in enabling their Centessa Subsidiaries by providing centralized resources, supporting development of programs, and overseeing judicious capital allocation. They are convinced that bringing together their 16 high conviction programs under a unified, asset-centric structure at scale is in itself a competitive advantage in the industry. Going forward, their intent is to become the partner of choice for founder-subject matter experts with high conviction programs by fostering a research engine that allows their leading talent to focus exclusively on the pursuit of their unique product visions, striving for scientific excellence and patient benefit. Consistent with their operating model today, these founder-subject matter experts will be directly incentivized and appropriately supported to develop and bring medicines to market. Direct incentivization is achieved through two principle financial incentives: first, through each founder-subject matter expert having a significant equity stake in Centessa and, thereby, compensated commensurately with the Company’s performance; second, they disproportionately share in upside through certain agreed milestones payment of a pre-agreed amount payable upon defined events such as regulatory approval of an applicable drug or the payment of a pre-agreed percentage of the net aggregate cash proceeds from certain strategic transactions (including partnerships / out-licensing agreements and/or a sale) concerning the relevant Centessa Subsidiary. These incentives are designed to motivate their founder-subject matter experts to develop and bring medicines to patients.

Separately, their relentless focus on data-driven decision-making is aimed at enabling them to embrace and implement a “fail fast, and fail early” philosophy to close programs expeditiously when data dictates. Data-driven decision making is at the core of their asset-centric model. Centessa management retains final authority over resource allocation decisions across the Centessa Subsidiaries’ programs, and aims to expeditiously terminate programs when the data do not support advancing a program. These features of their asset-centric model are designed to reflect their “fail fast and fail early” philosophy when data warrants. They believe their direct incentivization model and relentless focus on data-driven decision-making is a differentiated approach and philosophy to that deployed by traditional R&D models.

Their bottom-up, asset-centric operating model fosters an ecosystem in which they enable the founder-subject matter experts at each Centessa Subsidiary to develop their programs with a high degree of autonomy and with complementary operational and R&D support from Centessa. This is designed to enable each Centessa Subsidiary to execute its program or programs with greater agility and enhanced probability of success. Each Centessa Subsidiary focuses its resources and expertise on progressing high conviction programs that follow well elucidated biological pathways, with the goal of addressing a significant unmet patient need. While they focus on biological pathways where there is prior learning in human genetics and/or clinical evidence of activity to enhance odds of program success, many of their highly-differentiated programs are enabled by proprietary structural biology insights.

Traditional R&D organizations realize the benefit of having a diversified pipeline with multiple uncorrelated programs while reaching a scale that allows for an optimized and flexible balance sheet and access to infrastructure and resources. Similarly, by initially combining a curated portfolio of asset-centric companies under a central management team, they expect to receive the benefits of a diversified pipeline of high conviction programs and mitigate the binary risk inherent in single-asset companies. They believe that their incentivization framework enables their Centessa Subsidiary teams to maintain an undiluted singular product focus, and to pursue paths forward that are determined primarily by the data that they generate. Subsidiary teams are designed to be small, with limited fixed costs to further enhance the economics of drug development, particularly in cases where expeditious closure of programs is warranted.

In addition to the broad range of disease areas they pursue, their portfolio is diversified in several other ways, including:

• Therapeutic approaches: small molecule inhibitors, agonists, correctors, degraders, traditional and engineered antibodies and biologics based on engineered molecules;
• Development approaches: novel targets, differentiated fast-follower based on improved safety, and/or refined mechanism; and
• Discovery approaches: structure-based design, protein engineering and novel screening methods.

Their multiple modes of diversification across their portfolio substantially mitigate the binary nature of product development.

Their Pipeline

Their current portfolio consists of 16 high conviction programs, including four programs currently being evaluated in clinical trials and 12 additional preclinical programs. They aim to pursue programs that target pathways with clear biological rationale. Given that biological pathways have varying influence on disease pathophysiology, they believe it is paramount to identify the most critical pathways that contribute to disease onset and severity to aid in development of appropriate therapeutics. Human genetics offers a glimpse into specific genes, and downstream proteins that are associated with disease. By targeting such disease associated genes or proteins, they seek to increase the probability of impacting disease outcome. Further, they place a premium on learnings from the clinic whereby a drug has established the relevance of a biological pathway contributing to disease outcome. Their portfolio largely consists of programs where there is prior learning in human genetics or precedented human activity for a pathway of interest. Their strategy is to assemble a pipeline of product candidates bearing these attributes, which they believe may translate into program success.

Their current pipeline includes the following four clinical stage product candidates:

Lixivaptan (Palladio Biosciences): vasopressin V2 receptor small molecule inhibitor currently in Phase 3 clinical development for the treatment of autosomal dominant polycystic kidney disease (ADPKD). While the ongoing Phase 3 study is not a registrational trial, Palladio is preparing to conduct a global Phase 3 pivotal trial of lixivaptan in ADPKD patients, (designated the ACTION study) which they expect to commence by early-to-mid 2022. They believe lixivaptan has the potential to deliver similar efficacy benefits to tolvaptan, which is currently indicated for a subset of ADPKD patients, with a differentiated safety and tolerability profile that may enable access and therapeutic benefit to a broader set of patients;

SerpinPC (ApcinteX): activated protein C inhibitor currently in Phase 2a clinical development for the treatment of hemophilia A and B. They believe SerpinPC has the potential to improve upon the current standards of care by offering a long-acting, subcutaneous, non-replacement therapy that rebalances the coagulation cascade to provide both prophylactic and on-demand therapy in all patients with hemophilia regardless of subtype;

Imgatuzumab (Pega-One): anti-EGFR monoclonal antibody expected to enter a potential registrational Phase 2 clinical trial for the treatment of cutaneous squamous cell carcinoma (CSCC). Imgatuzumab is also being considered for treatment of other solid tumors in the context of combination treatment with immunotherapy. They believe imgatuzumab represents a next-generation of antibody design offering enhanced antibody derived cell cytotoxicity (ADCC) and antibody derived cell phagocytosis (ADCP) properties; and

ZF874 (Z Factor): small molecule chemical chaperone folding corrector of the Z variant of alpha-1-antitrypsin (Z-A1AT) currently in Phase 1 clinical development for the treatment of alpha-1-antitrypsin deficiency (A1ATD). ZF874 leverages Z Factor’s proprietary insights into the misfolding of the Z-A1AT protein to correct protein folding and normalize protein levels to treat both lung and liver disease manifestations of A1ATD.

In addition to their clinical stage product candidates, their current portfolio consists of 12 preclinical assets:

IPO Detail

This is the initial public offering of Centessa Pharmaceuticals plc and no public market currently exists for its ADSs. Centessa Pharmaceuticals plc is offering 15,000,000 ADSs as described in the prospectus. The company expects the initial public offering price of its ADSs to be between $18.00 and $20.00 per ADS. The company has applied to list its ADSs on the NASDAQ Global Market under the symbol “CNTA.”

Use of Proceeds

They estimate that the net proceeds to them from the sale of 15,000,000 ADSs in this offering will be approximately $256.4 million. The principal purposes of this offering are to create a public market for the ADSs and to facilitate their future access to the public equity markets and obtain additional capital. They currently expect to use the net proceeds from this offering, together with their existing cash, as follows:

Competition

Market Opportunity

ADPKD is a hereditary disorder characterized by the formation and enlargement of cysts in the kidney, liver, and other organs. It is the fourth leading cause of kidney failure in the U.S. and one of the most common inherited genetic diseases in humans, occurring equally in women and men, in all races, globally. There are an estimated 140,000 diagnosed ADPKD patients in the U.S. There is no cure for ADPKD. Only one drug, tolvaptan, has been approved for treatment of ADPKD. They believe that lixivaptan may offer similar therapeutic activity in treating ADPKD as compared to tolvaptan while avoiding the DILI associated with tolvaptan use in this patient population.

Hemophilia  HA and HB are X-linked genetic disorders affecting one in 5,000 and one in 20,000 live male births, respectively, resulting in spontaneous internal bleeding that can be life-threatening. More than 70% of bleeds occur into joints (hemarthrosis) causing chronic joint damage (arthropathy) with musculoskeletal destruction. The bleeding associated with these disorders is the result of a defect or deficiency in factor (f)VIII (in the case of HA) or fIX (in the case of HB), the two components of the intrinsic tenase complex.

CSCC occurs when DNA damage from exposure to ultraviolet radiation or other damaging agents trigger abnormal changes in squamous cells. Higher UV exposure, and growth in aging populations and populations using immunosuppressive therapies, including organ transplant recipients, have led to a higher incidence of CSCC, which is the second most common skin cancer, accounting for approximately 20% to 30% of nonmelanoma skin cancers. However, if left untreated, CSCC leads to an advanced stage, which is characterized by a lack of curative approaches, highlighting the need for additional treatment options in this patient population. It is estimated that approximately 3% of CSCC patients progress to advanced disease. In 2018, CSCC accounted for approximately 10,000 new advanced stage patients in the U.S. and approximately 5,000 in Europe. The advanced CSCC patient population is projected to increase by 50% to approximately 15,000 in the U.S. and 22,500 globally by 2037. Given the low incidence of the condition, advanced stage CSCC is expected to qualify as an orphan designated disease in the U.S. and Europe. Based on conversations with key opinion leaders in the U.S. and Europe, they estimate that imagatuzamab has the potential to address the needs of approximately 65% of advanced CSCC patients, including initial responders to ICIs who will relapse over time and eventually will require subsequent treatment. They estimate that the addressable opportunity for imagatuzamab in the PD-1-ineligible and second line advanced CSCC patient population in the U.S. and Europe is up to $1.0 billion per year.

AATD is an autosomal recessive disorder most frequently caused by missense mutations in the A1AT gene that lead to misfolding, and therefore reduced secretion of native A1AT into the circulation. Over 100 mutations have been described that lead to deficiency of A1AT, the most common of which is the ‘Z’ mutation, with 1 in 25 individuals of European descent carriers (PiMZ), and 1 in 1,800 homozygous. Individuals homozygous for the Z mutation (PiZZ) have A1AT levels 10–15% of normal and account for 95% of the known cases of AATD. Although classified as a rare disease, AATD is one of the most common rare diseases, with incidence similar to cystic fibrosis. AATD remains highly underdiagnosed, but it is estimated that there are 200,000 PiZZ individuals worldwide. PiSZ individuals (S denotes a milder deficiency mutation) are also at increased risk of COPD, and there are estimated to be 1.2 million individuals worldwide. Market expansion into PiMZ, of which there are an estimated 42.4 million individuals, is possible in the large subset of the general COPD and NASH populations, where the PiMZ genotype is highly over-represented.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2020

(in thousands, except share and per share data)

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2021

(in thousands, except share and per share data)

Target Markets

Company's Unique Strengths

Lixivaptan has shown the potential to avoid safety issues associated with the only drug approved for the treatment of ADPKD, tolvaptan,, which is associated with serious drug induced liver injury and in the US is available only under a Risk Evaluation and Mitigation Strategy (REMS) distribution program.

Lixivaptan has exhibited a pharmacodynamic effect showing a dose-related suppression of urine osmolality, a marker of receptor inhibition, and has shown no signs of liver toxcitity.

SerpinPC has the potential to address all forms of hemophilia, including moderate and severe HA and HB, regardless of inhibitor status, and potentially other rare bleeding distorders.

SerpinPC offers subcutaneous bioavailability, tolerability profile and PK suitable for monthly dosing without the need for factor replacement.

SerpinPC has the potential to reach the large population of hemophilia patients currently without access to treatment.

Imgatuzumab has demonstrated an acceptable safety profile and promising anti-tomor activities in heavily pretreated patients.

Open-label clinical trial data of Imgatuzumab suggests anti-tumor activity across multiple solid tumor types, including colorectal and head and neck squamous cell carcinoma.  

Imgatuzumab combination regimens with immunotherapy compounds or small molecule inhibitors have the potential to drive stronger anti-tumor activity in a broad spectrum of oncology indications.

ZF874, in preclinical invivo mouse studies, increased the plasma concentration of human Z-A1AT and reduced liver burden and pathology.

At high doses, ZF874 has the potential to normalized A1AT levels.

Company's Unique Risks

They may not be successful in their efforts to use their asset-centric business model to build a pipeline of product candidates with commercial value. A key element of Centessa’s strategy is to use their differentiated asset-centric business model to build, from the bottom-up, a research and development engine to source and develop high conviction programs, product candidates, technologies or intellectual property that they believe are novel, employ differentiated mechanisms of action, are more advanced in development than competitors, or have a combination of these attributes to ultimately deliver impactful medicines to patients.

They face challenges, risks and expenses related to the Reorganization in integrating the operations of their asset-centric Centessa Subsidiaries, as well as the management of the expected growth in the scale and complexity of their operations following this offering.

Some of their officers currently serve, and in the future may serve, as directors or officers of their Centessa Subsidiaries, and, as a result, have and may continue to have, statutory, fiduciary and other duties to their subsidiaries causing conflicts of interest with respect to their duties to them and their duties to their subsidiaries and in determining how to devote themselves to their affairs and the affairs of their subsidiaries. Their subsidiaries’ partners may also disagree with the sufficiency of resources that they provide to each Centessa Subsidiary.

Their Centessa Subsidiaries are party to certain agreements that provide their licensors and/or collaborators with rights that could delay or impact the ability of their Centessa Subsidiaries to sell assets, or enter into strategic alliances, collaborations or licensing arrangements with other third parties or the potential sale of their Centessa Subsidiaries.

They, and their Centessa Subsidiaries prior to the Reorganization, incurred net losses since inception, and they expect to continue to incur losses for the foreseeable future and may never achieve or maintain profitability.

They have never generated revenue from product sales and may never be profitable.

Even if this offering is successful, they will need substantial additional funds to advance development of their product candidates, and they cannot guarantee that they will have sufficient funds available in the future to develop and commercialize their current or future product candidates.

Their product candidates are in various stages of development, including many in discovery and preclinical stages, and may fail in development or suffer delays that materially adversely affect their commercial viability.

They are dependent on third parties having accurately generated, collected, interpreted and reported data from certain preclinical studies and clinical trials that were previously conducted for their product candidates.

The market opportunities for their oncology product candidates may be relatively small since the patients who may potentially be treated with their oncology product candidates are those who are ineligible for or have failed prior treatments, and their estimates of the prevalence of their target patient populations may be inaccurate.

Certain of their product candidates are expected to be used with a drug delivery system and thus may be regulated as a combination product and may face additional challenges, risks and delays in the product development and regulatory approval process.

They rely, and expect to continue to rely, on third parties to conduct their preclinical studies and clinical trials and if these third parties perform in an unsatisfactory manner, their business could be substantially harmed.

They currently rely and expect to rely in the future on the use of third parties to manufacture their product candidates. Their business could be harmed if the third party manufacturers experience supply chain shortages, fail to provide them with sufficient quantities of their product candidates or fail to do so at acceptable quality levels or prices or deliver defective products.

Certain third parties upon whom they rely for the supply of the active pharmaceutical ingredient used in their product candidates are their sole source of supply, and the loss of any of these suppliers could significantly harm their business.

Certain of their employees and inventions are subject to German law. Certain of their personnel work in Germany and are subject to German employment law.  They face the risk that disputes may occur between them and their current or past employees pertaining to the sufficiency of compensation paid by them, allocation of rights to inventions under this act or alleged non-adherence to the provisions of this act, any of which may be costly to resolve and take up their management’s time and efforts whether they prevail or fail in such dispute.

As a result of the COVID-19 pandemic, they could experience disruptions that could severely impact their business, preclinical studies and clinical trials.

They are comprised of multiple portfolio operating entities, all of which are at differing stages in their commercial, clinical, and pre-clinical operations, and all of which have taken differing measures to comply (and have varying degrees of compliance) with Data Protection Requirements. The lack of uniformity in the portfolio operating entities’ efforts to comply with Data Protection Requirements, including, without limitation, establishing appropriate information security measures, could materially and adversely affect their business.

Their principal shareholders and management own a significant percentage of their voting shares and will be able to exert significant influence over matters subject to shareholders’ approval. Prior to this offering, their executive officers, directors, and 5% shareholders beneficially owned approximately 54.5% of their voting shares as of March 31, 2021 and assuming the sale by them of 15,000,000 ADSs in this offering, and not accounting for any shares purchased in this offering by certain of their existing shareholders (or their affiliates), they anticipate that same group will hold approximately 45.5% of their outstanding ordinary shares following this offering (assuming no exercise of the underwriters’ option to purchase additional ADSs), without giving effect to any purchases that certain of these holders may make through their directed share program. Therefore, even after this offering, these shareholders will have the ability to influence them through this ownership position.

Bottom Line

Centessa Pharmaceuticals plc (Centessa) was conceived by combining the primary strengths of the asset-centric model with the benefits of diversification and scale typically attributed to traditional large R&D organizations. They have implemented this reimagined approach to R&D by initially combining a curated portfolio of ten wholly-owned asset-centric companies, which they refer to as the Centessa Subsidiaries, which are developing 16 high conviction programs with clear biological rationale. Their programs cover a range of high-value therapeutic areas including oncology, hematology, immunology / inflammation, neuroscience, hepatology, pulmonology, nephrology, and range from discovery-stage research through late-stage clinical development. Additionally, a substantial number of their programs focus on rare disease indications with significant unmet need. Centessa was formed in October 2020 by Medicxi with a view to ultimately acquiring, and thereby becoming the holding company of, several pre-revenue, development stage biotech companies each of which was either controlled by and/or invested in by a fund affiliated with Medicxi or Index Ventures. They are convinced that bringing together their 16 high conviction programs under a unified, asset-centric structure at scale is in itself a competitive advantage in the industry. Separately, their relentless focus on data-driven decision-making is aimed at enabling them to embrace and implement a “fail fast, and fail early” philosophy to close programs expeditiously when data dictates. They believe their direct incentivization model and relentless focus on data-driven decision-making is a differentiated approach and philosophy to that deployed by traditional R&D models. They believe that their incentivization framework enables their Centessa Subsidiary teams to maintain an undiluted singular product focus, and to pursue paths forward that are determined primarily by the data that they generate. Subsidiary teams are designed to be small, with limited fixed costs to further enhance the economics of drug development, particularly in cases where expeditious closure of programs is warranted. Their current portfolio consists of 16 high conviction programs, including four programs currently being evaluated in clinical trials and 12 additional preclinical programs. Their portfolio largely consists of programs where there is prior learning in human genetics or precedented human activity for a pathway of interest. Their current pipeline includes the following four clinical stage product candidates: Lixivaptan for the treatment of autosomal dominant polycystic kidney disease (ADPKD), SerpiPC for the treatment of hemophilia A and B, Imgatuzumab for the treatment of cutaneous squamous cell carcinoma (CSCC) and for the treatment of other solid tumors in combination with immunotherapy, and ZF874 for the treatment of alpha-1-antitrypsin deficiency (A1ATD). In addition to their clinical stage product candidates, their current portfolio consists of 12 preclinical asset. Across their Centessa Subsidiaries, they currently have a portfolio of 173 issued patents which includes 156 ex-U.S. patents and 17 issued U.S. patents directed to either their clinical stage product candidates or other programs being developed.

ADPKD is a hereditary disorder characterized by the formation and enlargement of cysts in the kidney, liver, and other organs. There are an estimated 140,000 diagnosed ADPKD patients in the U.S. There is no cure for ADPKD. Only one drug, tolvaptan, has been approved for treatment of ADPKD. They believe that lixivaptan may offer similar therapeutic activity in treating ADPKD as compared to tolvaptan while avoiding the DILI associated with tolvaptan use in this patient population. HA and HB are X-linked genetic disorders affecting one in 5,000 and one in 20,000 live male births, respectively, resulting in spontaneous internal bleeding that can be life-threatening. CSCC occurs when DNA damage from exposure to ultraviolet radiation or other damaging agents trigger abnormal changes in squamous cells. Higher UV exposure, and growth in aging populations and populations using immunosuppressive therapies, including organ transplant recipients, have led to a higher incidence of CSCC, which is the second most common skin cancer, accounting for approximately 20% to 30% of nonmelanoma skin cancers. . In 2018, CSCC accounted for approximately 10,000 new advanced stage patients in the U.S. and approximately 5,000 in Europe. The advanced CSCC patient population is projected to increase by 50% to approximately 15,000 in the U.S. and 22,500 globally by 2037. Given the low incidence of the condition, advanced stage CSCC is expected to qualify as an orphan designated disease in the U.S. and Europe. AATD is an autosomal recessive disorder most frequently caused by missense mutations in the A1AT gene that lead to misfolding, and therefore reduced secretion of native A1AT into the circulation. Although classified as a rare disease, AATD is one of the most common rare diseases, with incidence similar to cystic fibrosis. AATD remains highly underdiagnosed, but it is estimated that there are 200,000 PiZZ individuals worldwide. PiSZ individuals (S denotes a milder deficiency mutation) are also at increased risk of COPD, and there are estimated to be 1.2 million individuals worldwide. Market expansion into PiMZ, of which there are an estimated 42.4 million individuals, is possible in the large subset of the general COPD and NASH populations, where the PiMZ genotype is highly over-represented.

They intend to enhance R&D productivity by streamlining the decision making process and aligning incentives of all stakeholders involved. As they grow through the addition of new Centessa Subsidiaries, asset centricity will remain their cornerstone, allowing them to stay nimble to make the best decision for individual programs. They are committed to supporting and efficiently advancing their pipeline by: adhering to a “follow the data” philosophy to judiciously deploy capital for pipeline maturation; enabling their program teams with centralized support to access expertise and accelerate interrogation of key scientific hypotheses; and operating with agility to adapt to external data readouts that have direct relevance to program conviction. They are agnostic to source of program and therapeutic area as long as their programs address important needs for patients, as evidenced by their diverse portfolio spanning across multiple disease areas. They believe these founder-subject matter experts will be attracted to their model due to the significant autonomy to further develop their assets, the absence of distractions that typically arise from company-building and capital raising efforts, access to their centralized resources, scale and capital and the unique incentives that they purposefully design to reward program success while mitigating downside. Their incentivization programs, with tangible milestone payments based on defined events such as regulatory approval of an applicable drug or execution of a strategic transaction concerning the relevant Centessa Subsidiary, align all stakeholders and ensure success in science is rewarded. They are confident this approach to incentivization will be a catalyst to attracting founder-subject matter experts to Centessa.

Lixivaptan has shown the potential to avoid safety issues associated with the only drug approved for the treatment of ADPKD, tolvaptan,, which is associated with serious drug induced liver injury and in the US is available only under a Risk Evaluation and Mitigation Strategy (REMS) distribution program. Lixivaptan has exhibited a pharmacodynamic effect showing a dose-related suppression of urine osmolality, a marker of receptor inhibition, and has shown no signs of liver toxcitity. SerpinPC has the potential to address all forms of hemophilia, including moderate and severe HA and HB, regardless of inhibitor status, and potentially other rare bleeding distorders. SerpinPC offers subcutaneous bioavailability, tolerability profile and PK suitable for monthly dosing without the need for factor replacement. SerpinPC has the potential to reach the large population of hemophilia patients currently without access to treatment. Imgatuzumab has demonstrated an acceptable safety profile and promising anti-tomor activities in heavily pretreated patients. Open-label clinical trial data of Imgatuzumab suggests anti-tumor activity across multiple solid tumor types, including colorectal and head and neck squamous cell carcinoma.  Imgatuzumab combination regimens with immunotherapy compounds or small molecule inhibitors have the potential to drive stronger anti-tumor activity in a broad spectrum of oncology indications. ZF874, in preclinical invivo mouse studies, increased the plasma concentration of human Z-A1AT and reduced liver burden and pathology. At high doses, ZF874 has the potential to normalized A1AT levels.

They may not be successful in their efforts to use their asset-centric business model to build a pipeline of product candidates with commercial value. They face challenges, risks and expenses related to the Reorganization in integrating the operations of their asset-centric Centessa Subsidiaries, as well as the management of the expected growth in the scale and complexity of their operations following this offering. Some of their officers currently serve, and in the future may serve, as directors or officers of their Centessa Subsidiaries, and, as a result, have and may continue to have, statutory, fiduciary and other duties to their subsidiaries causing conflicts of interest with respect to their duties to them and their duties to their subsidiaries. Their Centessa Subsidiaries are party to certain agreements that provide their licensors and/or collaborators with rights that could delay or impact the ability of their Centessa Subsidiaries to sell assets, or enter into strategic alliances. They, and their Centessa Subsidiaries prior to the Reorganization, incurred net losses since inception, and they expect to continue to incur losses for the foreseeable future and may never achieve or maintain profitability. They have never generated revenue from product sales and may never be profitable. Their product candidates are in various stages of development, including many in discovery and preclinical stages, and may fail in development or suffer delays that materially adversely affect their commercial viability. They are dependent on third parties having accurately generated, collected, interpreted and reported data from certain preclinical studies and clinical trials that were previously conducted for their product candidates. The market opportunities for their oncology product candidates may be relatively small since the patients who may potentially be treated with their oncology product candidates are those who are ineligible for or have failed prior treatments, and their estimates of the prevalence of their target patient populations may be inaccurate. Certain of their product candidates are expected to be used with a drug delivery system and thus may be regulated as a combination product and may face additional challenges, risks and delays in the product development and regulatory approval process. They rely, and expect to continue to rely, on third parties to conduct their preclinical studies and clinical trials and if these third parties perform in an unsatisfactory manner, their business could be substantially harmed. They currently rely and expect to rely in the future on the use of third parties to manufacture their product candidates. Certain third parties upon whom they rely for the supply of the active pharmaceutical ingredient used in their product candidates are their sole source of supply, and the loss of any of these suppliers could significantly harm their business. Certain of their personnel work in Germany and are subject to German employment law.  They face the risk that disputes may occur between them and their current or past employees pertaining to the sufficiency of compensation paid by them, allocation of rights to inventions under this act or alleged non-adherence to the provisions of this act, any of which may be costly to resolve and take up their management’s time and efforts whether they prevail or fail in such dispute. As a result of the COVID-19 pandemic, they could experience disruptions that could severely impact their business, preclinical studies and clinical trials. They are comprised of multiple portfolio operating entities, all of which are at differing stages in their commercial, clinical, and pre-clinical operations, and all of which have taken differing measures to comply (and have varying degrees of compliance) with Data Protection Requirements. They anticipate that their executive officers, directors, and 5% shareholders will hold approximately 45.5% of their outstanding ordinary shares following this offering (assuming no exercise of the underwriters’ option to purchase additional ADSs), without giving effect to any purchases that certain of these holders may make through their directed share program. Therefore, even after this offering, these shareholders will have the ability to influence them through this ownership position.