A biotech that's developing a drug for a rare metabolic disorder is exploring going public in 2019

Hollis Johnson/Business Insider

• New York-based biotech Applied Therapeutics is exploring an initial public offering in the first half of 2019, according to people familiar with the matter.
• The company's developing a drug for a rare metabolic disorder, as well as treatments for diabetes complications.

The red hot market for biotech IPOs may have another entrant.

New York-based Applied Therapeutics, which is developing treatments for cardio-metabolic conditions, is exploring an IPO that could land in first half of next year, according to people familiar with the matter.

The people cautioned that timing could change depending on market conditions.

Applied Therapeutics in 2017 raised a series A round led by Alexandria Venture Investments along with E Squared Capital Management, Franklin Berger, ETP Global Fund, and Syno Capital. In September, the company hired former Sanofi executive Dr. Riccardo Perfetti as chief medical officer.

Its lead drug, AT-007, is being developed to treat galactosemia, a rare condition diagnosed at birth that affects how the body breaks down galactose, a sugar produced in the body and found in lactose, the sugar present in milk. It's estimated to impact one of every 30,000 to 60,000 newborns.

Beyond galactosemia, Applied is also working on two other compounds, including one for diabetic cardiomyopathy, a complication from diabetes that results in a thickening of the heart muscle, and diabetic retinopathy, another diabetes complication that affects the eye.

The hope is to use the drugs to inhibit an enzyme called aldose reductase, responsible for breaking down sugars into chemicals that aren't good for our bodies - in the case of galactosemia, that's a sugar alcohol known as galactitol and in diabetic patients breaking down glucose incorrectly, that ends up being a sugar alcohol known as sorbitol.

Pharmaceutical companies developed a number of these aldose reductase inhibitors in the 1990s, but the drugs didn't pan out, often because of side effects. But now, using technology licensed in from Columbia University, the hope is to circumvent those side effects.

2018 has been a big year for biotech IPOs. In the first nine months of 2018 alone, there have been 47 biotech initial public offerings, raising $4.6 billion in capital. That's already more than in all of both 2016 and 2015. Even amid the market slump, biotech had its biggest IPO of the year, the cancer drugmaker Allogene this week brought in $324 million in a public offering that valued the company at $2.2 billion.

See also:

• 'Everybody's going to have a lot of losers': Most biotech investors are getting burned even as fledgling companies are raising money hand-over-fist
• The market for biotech IPOs is red hot - here are the top 10 of 2018