IPO Preview: Alcobra Pharmaceuticals

May.21.13 | About: Alcobra Ltd. (ADHD)

Based in Tel Aviv, Israel, Alcobra Pharmaceuticals (NASDAQ:ADHD) scheduled a $25 million IPO with a market capitalization of $133 million at a price range mid-point of $11, for Wednesday, May 22, 2013.

Five other new IPOs are scheduled for IPOs for this week. The full IPO calendar is here.

  • F-1A filed May 2, 2013
  • Manager, Joint Managers: Aegis Capital
    Co Managers: Sunrise Securities

ADHD is a biopharmaceutical company with a lead product targeted towards Attention Deficit Hyperactivity Disorder, or ADHD. ADHD has completed a Phase 2 study, but TEVA backed out of a collaboration agreement in November 2011 by not making a payment.


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Alcobra Pharmaceuticals (ADHD)







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ADHD has no revenue, 5 times book is on the high side for an emerging biopharma IPO, and the offering is too small for investor liquidity.

Avoid the ADHD IPO.

ADHD is an emerging biopharmaceutical company primarily focused on the development and commercialization of a proprietary drug, MG01CI, to treat Attention Deficit Hyperactivity Disorder, or ADHD.

MG01CI is a non-stimulant with a different mechanism of action. MG01CI is a proprietary, combined rapid onset/extended release formulation of the chemical Pyridoxine Pyroglutamate, which is more broadly known as Metadoxine. Metadoxine has been available since the 1980s in immediate release forms for the acute treatment of alcohol intoxication and the chronic treatment of alcoholic liver disease in Italy, Portugal, Hungary, Russia, India, China, Mexico and Thailand.

In September 2011, ADHD completed a 120-patient double-blind Phase II study in Israel that showed significant improvement in clinical ADHD symptoms, and also showed favorable tolerability with no significant side effects over a placebo. The trial met all primary and secondary clinical endpoints showing statistically significant improvement over the placebo-treated control group.

ADHD plans to initiate discussions with the U.S. Food and Drug Administration, or FDA, within six months from the date of this prospectus to seek approval, via an Investigational New Drug, or IND, application submission, to conduct advanced clinical trials in the United States for the use of MGO1CI to treat ADHD in adults.

ADHD previously had a collaboration with Teva Pharmaceuticals, Ltd., a large Israeli generic drug manufacturer. After a successful proof of concept trial in 2010, Teva made an equity investment in ADHD, negotiated the right to acquire ADHD should MG01CI reach market, and funded the next stage of clinical development of MG01CI.

All of Teva's rights with respect to the development of MG01CI and any outcomes thereof terminated when it failed to timely exercise an option to continue financing the development of MG01CI in November 2011. ADHD does not have any continuing obligations to Teva other than that Teva continues to be a shareholder of the company with related rights.

One of ADHD's patent applications has been allowed by the U.S. PTO, and ADHD expects the patent to be issued shortly. No patents have yet been issued on any of our patent applications.

There are a number of existing treatments for ADHD currently on the market, all of which are marketed by pharmaceutical companies that are far larger and more experienced than ADHD. Patients and doctors are often unwilling to change medications, and this factor will make it difficult for MG01CI to penetrate the market. Further, the industry is highly competitive and subject to rapid and significant technological change. Our potential competitors include large pharmaceutical and biotechnology companies, specialty pharmaceutical and generic drug companies, academic institutions, government agencies and research institutions.

ADHD expects to net $22 million from its IPO. Proceeds are allocated as follows:
· completing at least two advanced clinical trials of MG01CI for adult ADHD, estimated at $6,000,000 each;
· completing a Phase I/II clinical study in children for MG01CI, estimated at $1,000,000 to $2,000,000;
· preparing for proposed studies in adults and children for MG01CI, including engaging the FDA in discussions related to protocols for the trials, estimated at $1,000,000 to $3,000,000;
· evaluating MG01CI in Phase II clinical trials of additional disorders of cognitive function estimated at $1,000,000 to $2,000,000; and
· the remainder for working capital and general corporate purposes.

Disclaimer: This ADHD IPO report is based on a reading and analysis of ADHD'S's F1-1A filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.