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Revance Therapeutics Inc (NASDAQ:RVNC), a clinical-stage biopharmaceutical firm specializing in the development of novel forms of botox, plans to raise $75 million in its upcoming IPO.

The Newark, California-based firm will offer 5.0 million shares at an expected price range of $14-$16 per share. If the IPO can find the midpoint of that range at $15 per share, RVNC will command a market value of $253 million.

· RVNC filed on December 31, 2013.

· Lead Underwriters: Cowen and Company LLC, Piper Jaffray & Co

· Underwriters: BMO Capital Markets Corp

Summary

RVNC is a clinical-stage biopharm firm focused on the development and commercialization of novel forms of botulinum toxin, better known as botox, the protein used in various aesthetic and therapeutic procedures.

The firm's lead product candidate, RT001, is a topical formulation of botulinum toxin type A-a sharp divergence from current botox products, which are exclusively available via injection. RVNC believes that the painlessness and relative ease of use of a topical product could attract a much-expanded customer base over the current injectable botox market. RT001 could be applied in aesthetic procedures including those to remove wrinkles around the eyes, as well as in therapeutic indications like hyperhidrosis and migraines.

RT001 is in a Phase 3 clinical development program; RVNC plans to file for regulatory approval in the US and Europe in 2016. RVNC is also developing RT002, a form of botox designed for use in indications where deeper injections and long-lasting effects are required.

Valuation

RVNC offers the following figures in its S-1 balance sheet for the nine months ending September 30, 2013:

Revenue: $308,000.00

Net Loss: ($42,369,000.00)

Total Assets: $18,621,000.00

Total Liabilities: $42,621,000.00

Stockholders' Equity: ($147,683,000.00)

RVNC's miniscule revenues and high losses are common to clinical-stage biopharmaceutical firms. RVNC will not be able to turn a profit until it successfully gains approval for and commercializes one or more of its candidates.

Business

RVNC's product candidates, if approved, will face competition from both pharmaceutical firms and cosmetics firms. Firms offering similar products include Allergan (NYSE:AGN), US WorldMeds, Ipsen Ltd, Valeant Pharmaceuticals International (NYSE:VRX), Merz Pharma, and Johnson & Johnson (NYSE:JNJ). These firms have significantly greater technical and financial capacities than RVNC.

Management

President and CEO L. Daniel Browne co-founded RVNC and has served in his current positions since the firm commenced operations in 2002. Mr. Browne previously served as President and CEO of Neomend, Inc., and as President of Prograft Medical Inc. He also worked over 16 years in leadership positions in the Gore Medical Products Division of W.L. Gore & Associates, Inc. Mr. Browne holds a B.S. from the University of Hawaii in Cell and Molecular Biology and an M.B.A. from Pepperdine University.

Conclusion

We are positive on this IPO given the hype around botox.

RVNC does appear to be nearing approval for RT001, and a topical application for botox sounds like a goldmine. However, RVNC's losses are massive even for a pre-clinical biopharma firm, and its products are still some distance from commercialization, so there certainly is risk to RVNC. CEO L. Daniel Browne's $2.2 million compensation package for 2013 also seems excessive, given that the firm has yet to bring a product to market.

Source: Revance Therapeutics IPO May Make You Look Good