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Based in Newark, CA, Revance Therapeutics (NASDAQ:RVNC) scheduled a $75 million IPO on the Nasdaq with a market capitalization of $253 million at a price range midpoint of $15 for Thursday, February 6, 2014.

The full IPO calendar is available at IPOpremium.com.

Conclusion

Positive: skin applied Botox, Phase 3 planned, shareholders indicate buying, high cash burn rate, see valuation below.

SEC Documents
Manager, Joint managers: Cowen and Company, Piper Jaffray

Co-Managers: BMO Capital Markets

End of lockup (180 days): Tuesday, August, 5, 2014

Summary

RVNC is working on providing Botox benefits without injections by just rubbing RVNC's product on the skin.

RVNC has statistically significant Phase 2 results, then went into a Phase 3 trial with a modified formulation that didn't show benefits, then went back to a Phase 2 trial. Now RVNC plans to initiate another Phase 3 trial.

Valuation

Glossary

Cash burn rate: When a company loses money with minimal depreciation and amortization (think biopharmas), the negative Price/Loss ratio is an indication of cash burn rate. The higher the loss the lower the absolute (negative) ratio. The lower the loss the higher the absolute (negative) ratio.

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing Sept 9 mos

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

Revance Therapeutics

$251

3,340

-6.3

3.7

3.9

30%

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

Business

RVNC is a clinical stage specialty biopharmaceutical company focused on the development, manufacturing and commercialization of novel botulinum toxin products for multiple aesthetic and therapeutic applications.

Botulinum toxin is a well-characterized protein currently used in numerous aesthetic and therapeutic indications and represents a multi-billion dollar market in the United States and other countries. All currently approved and commercially available botulinum toxin products are administered by injection.

Clinical trials
RVNC has conducted thirteen clinical trials, with a total of over 1,400 subjects, for the treatment of crow's feet lines and are currently in Phase 3 clinical development in the United States. RT001 was shown to be safe, with statistically significant and clinically meaningful results in RVNC's Phase 2 clinical trials.

In all concentrations of peptide and botulinum toxin studied, RT001 was well tolerated with no serious adverse events related to study drug or study treatment procedures or safety concerns.

RVNC has completed three Phase 2b clinical trials of RT001 to evaluate a 25 ng/mL dose of botulinum toxin for the treatment of moderate to severe crow's feet lines. Two of these trials were double-blind, randomized, placebo-controlled clinical trials. RT001 met the primary efficacy and all secondary endpoints in both trials.

After completing these Phase 2b clinical trials, RVNC modified the diluent formulation to improve stability, and then conducted a Phase 3 clinical trial of RT001, but saw no improvement from baseline in either the placebo or RT001 group using the new diluent formulation.

Subsequently, RVNC obtained stability data to confirm that the original Phase 2b formulation has adequate commercial stability. RVNC has since returned to the original Phase 2b diluent formulation and has conducted a two-cohort Phase 2 double-blind, randomized, placebo-controlled clinical trial.

The combined data for the first and second cohorts showed statistical significance in wrinkle severity from baseline comparable to that observed in our previous Phase 2b clinical trials. Additionally, RVNC plans to initiate a long-term open label Phase 3 safety clinical trial in 2014.

Based on RVNC's discussions with the U.S. Food and Drug Administration, or the FDA, the European Medicines Agency and other regulatory authorities, RVNC believes that three Phase 3 pivotal clinical trials and the Phase 3 open label safety clinical trial, if successful, will provide the efficacy data to support a regulatory filing for approval of RT001 for the treatment of crow's feet lines in the United States, Europe and other countries.

Product Candidates
RT001 is a topical formulation of botulinum toxin type A, which RVNC believes has significant advantages over existing injectable products and could significantly expand the botulinum toxin market beyond existing users.

RT001is a topical gel formulation of botulinum toxin type A in a proprietary single-use administration apparatus. RT001 is applied to the skin and uses a proprietary TransMTS® peptide technology to enable delivery of botulinum toxin across the skin, eliminating the need for injections

RVNC is evaluating RT001 in a broad clinical program that includes aesthetic indications such as lateral canthal lines, the wrinkles around the eyes which are commonly referred to as crow's feet lines, and therapeutic indications such as hyperhidrosis, or excessive sweating, migraine headache and allergic rhinitis, or inflammation of the mucous membrane inside the nose.

RT002
is a novel injectable formulation of botulinum toxin type A designed to be more targeted and longer lasting than currently available botulinum toxin injectable products. Both of RVNC's product candidates combine its purified botulinum toxin with its proprietary TransMTS® peptide delivery system.

Market

Today's culture places significant value on physical appearance, leading to widespread adoption of anti-aging and aesthetic treatments.

The aesthetic market has grown dramatically in the United States where consumers spent almost $11.0 billion in 2012 on over 10.1 million physician-administered surgical and non-surgical aesthetic procedures, according to American Society for Aesthetic Plastic Surgery annual statistics.

A strong consumer preference for non-surgical options and the increasing availability of effective alternatives has prompted adoption of non-surgical aesthetic procedures by a broader patient population. These trends have made non-surgical procedures the primary driver of growth in the aesthetic medicine market, accounting for 83% of the total number of procedures performed in 2012.

Injectable botulinum toxin treatments are the single largest cosmetic procedure in the United States and the rest of the world. According to GlobalData, in 2012 clinicians spent an estimated $1.3 billion globally on injectable botulinum toxin for aesthetic procedures and such spending is expected to grow at a compounded annual growth rate of 14% from 2011 through 2018.

Intellectual property

As of January 21, 2014, RVNC held 86 issued patents and 150 pending patent applications in several countries and it expects to continue to expand this patent portfolio.

RVNC has the ability to manufacture its own botulinum toxin type A product to support its clinical trials and eventually its commercial products.

RVNC manufactures and performs testing for both bulk drug substance and finished dose forms of drug product to support its topical RT001 product candidate and its injectable RT002 product candidate.

The additional components required for RVNC's topical RT001 dose form, the peptide, diluent and delivery apparatus, are all manufactured by third parties.

RVNC is licensed with the Centers for Disease Control and Prevention, or CDC, and with the California Department of Health Food and Drug Branch for use of botulinum toxin and to manufacture both the active pharmaceutical ingredient, or API, and the finished product in topical and injectable dose forms.

RVNC believes that having direct control over its manufacturing processes, from initial drug substance to finished product, will enable it to develop additional pharmaceutical product configurations effectively and with a competitive cost structure.

Competition

Numerous companies are engaged in the development, patenting, manufacture and marketing of healthcare products competitive with those that RVNC is developing.

Many of these potential competitors are large, experienced companies that enjoy significant competitive advantages, such as substantially greater financial, research and development, manufacturing, personnel and marketing resources, greater brand recognition and more experience and expertise in obtaining marketing approvals from the FDA and other regulatory authorities.

5% stockholders

Entities affiliated with Essex VIII(6) 36.1%

Entities affiliated with NovaQuest(9 24.8%

Entities affiliated with Vivo Ventures 6.9%

Entities affiliated with Technology Partners(8) 7.6%

Use of proceeds

RVNC expects to net $65.8 million from its IPO. Proceeds are allocated as follows:

$18 million to $23 million to fund research and development expenses associated with RVNC's RT001 and RT002 manufacturing, quality and regulatory efforts.

$10 million to $15 million to complete one Phase 3 clinical pivotal trial in the United States, to continue a long-term safety clinical trial and other associated programs relating to RT001 for the treatment of crow's feet lines, and to initiate RVNC's first Phase 2 clinical trial and associated programs relating to RT002 for the treatment of glabellar lines.

$11 million to make payments through 2014 under RVNC's September 2011 term loan agreement with Hercules Technology Growth Capital, Inc., which bears interest at a rate equal to the greater of 9.85% or the prime rate plus 6.60%, and requires the principal balance to be repaid in thirty-three equal monthly installments beginning in July 2012.

$7 million to make payments under RVNC's settlement agreement with Medicis Pharmaceutical Corporation (acquired by Valeant Pharmaceuticals International, Inc.).

Disclaimer: This RVNC IPO report is based on a reading and analysis of RVNC'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.

Source: IPO Preview: Revance Therapeutics