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Based in Bedminster, NJ, Aerie Pharmaceuticals (NASDAQ:AERI) scheduled a $68 million IPO with a market capitalization of $264 million at a price range mid-point of $13, for Friday, October 25, 2013.

Four IPOs are scheduled for this week. The full IPO calendar can be found at IPOpremium.

S-1 filed October 11, 2013.

Manager, Joint Managers: RBC Capital; Stifel

Co-Managers: Lazard Capital; Canaccord Genuity

Summary

AERI is a clinical-stage pharmaceutical company focused on the discovery, development and commercialization of first-in-class therapies for the treatment of patients with glaucoma and other diseases of the eye.

AERI currently has no collaborators.

Valuation

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing june 6 mos

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

Aerie Pharmaceuticals

$264

n/a

-33.0

3.8

3.9

26%

Glossary

Conclusion

AERI's rating is neutral at price-to-book value of 3.8, with no collaborators. AERI is losing money but not hemorrhaging money. The annualized loss rate percent of market cap is -7.5%.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above:

Business

AERI is a clinical-stage pharmaceutical company focused on the discovery, development and commercialization of first-in-class therapies for the treatment of patients with glaucoma and other diseases of the eye.

Glaucoma is one of the largest segments in the global ophthalmic market. In 2012, branded and generic glaucoma product sales exceeded $4.5 billion in the United States, Europe and Japan in aggregate, according to IMS, and prescription volume is expected to grow, driven in large part by the aging population.

AERI's strategy is to advance its product candidates, including dual-action AR-13324 and triple-action PG324, to regulatory approval and to commercialize these products in the United States.

Products

AERI's product candidates are once-daily eye drops that, if approved, will provide eye-care professionals with the first novel intraocular pressure lowering mechanisms of action, or MOA, to treat glaucoma in nearly 20 years.

Clinical trials

AERI's lead product candidate, dual-action AR-13324, recently completed a Phase 2b clinical trial. It is currently planning two Phase 3 registration trials for this product candidate, which it expects to commence in mid-2014. Additionally, it is planning to commence a Phase 2b clinical trial by early 2014 for its triple-action PG324, a fixed-dose combination of AR-13324 and the prostaglandin analogue, or PGA, latanoprost, the most commonly prescribed drug for the treatment of patients with glaucoma.

Intellectual Property

AERI's intellectual property consists of issued patents and pending patent applications for compositions of matter and methods of use, for product candidates and other proprietary technology.

For the primary product candidates AR-13324 and PG324, AERI holds U.S. Patent 8,450,344, which is scheduled to expire in 2026, and U.S. Patent 8,394,826, which is scheduled to expire in 2030, each of which has composition of matter and method use of claims for composition of matter.

Competition

Sucampo Pharmaceuticals, Inc. recently commercially relaunched Rescula, a twice-daily dosed PGA, with the claim that it reduces elevated IOP by increasing the outflow of aqueous humor through the TM.

In addition, early-stage companies that are also developing glaucoma treatments may prove to be significant competitors, such as Inotek Pharmaceuticals, which is developing an adenosine receptor agonist.

AERI expects that its competitors will continue to develop new glaucoma treatments, which may include eye drops, oral treatments, surgical procedures, implantable devices or laser treatments. Alternative treatments beyond eye drops continue to develop.

5% stockholders pre-IPO

Entities affiliated with ACP IV, L.P., 27%

Entities affiliated with Clarus Lifesciences II, L.P., 22%

Entities affiliated with Sofinnova Venture Partners VII, L.P., 19%

Entities affiliated with TPG Biotech Reinvest AIV, L.P., 27%

Use of proceeds

AERI expects to net $60 million from its IPO.

Proceeds are allocated as follows:

$24.0 million and $10.0 million for direct clinical and non-clinical costs, respectively, associated with the completion of Phase 3 registration trials for the product candidate AR-13324;

$4.0 million and $1.5 million for direct clinical and non-clinical costs, respectively, associated with the completion of the Phase 2b clinical trial for the product candidate PG324; and

the remainder for working capital and general corporate purposes.

Disclaimer: This AERI IPO report is based on a reading and analysis of AERI's S-1 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.

Source: IPO Preview: Aerie Pharmaceuticals