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Based in Woodcliff Lake, NJ, Eagle Pharmaceuticals (NASDAQ:EGRX) scheduled a $50 million IPO on the Nasdaq with a market capitalization of $209 million at a price range midpoint of $15 for Wednesday, February 12, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents
Manager, Joint managers: Piper Jaffray, William Blair

Co-Managers: Cantor Fitzgerald

Summary

EGRX is a specialty pharmaceutical company focused on developing and commercializing injectable products utilizing the FDA's 505(b)(2) regulatory pathway.

For the three months ended December '13 revenue increased 267% to $5.5 million from $1.5 million. Product sales were 40% of revenue and royalty income was 60%.

EGRX's collaborators include The Medicines Company (NASDAQ:MDCO), $2.2 billion market cap and Sandoz, division of Novartis (NYSE:NVS), $197 billion market cap.

The growth plan is to develop additional applications and sell worldwide without partners.

Valuation

Glossary

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing Dec 3 mos

Cap (MM)

Sls

Erngs*

BkVlue

TanBV

in IPO

Eagle Pharmaceuticals

$209

37.9

-16.3

4.6

4.6

24%

Conclusion

EGRX has 2 approved products, 6 advanced products, two major collaborators and a growth plan to proceed without partners over time.

Royalty and product sales are both showing very good growth.

Existing stockholders indicate an interest in buying $10 million on the IPO, or 20% of the IPO.

The future looks promising for EGRX so the IPO rating is a buy.

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

Business
EGRX is a specialty pharmaceutical company focused on developing and commercializing injectable products utilizing the FDA's 505(b)(2) regulatory pathway.

EGRX's business model is to develop proprietary innovations to FDA-approved, injectable drugs that offer longer commercial duration at attractive prices.

2 approved products, 6 advanced product candidates
As a result, EGRX's disclosed product portfolio now includes two approved products and six advanced product candidates. EGRX currently has one commercialized product, EP-1101 (argatroban).

Due to limited financial resources, EGRX initially decided to collaborate with a commercial partner in order to commercialize EP-1101 (argatroban) and it is now currently marketed by The Medicines Company and Sandoz Inc. pursuant to separate agreements.

As a result of its commercialization strategy, EGRX has been able to minimize certain expenses, but also is required to share revenues from EP-1101 (argatroban) with its commercial partners.

Collaborators
At December 31, 2013, EGRX's cumulative receivables related to royalty income consist of approximately $3.3 million in receivables from The Medicines Company and $1.7 million in receivables from Sandoz.

. The Medicines Company, $2.2 billion market cap.
. Sandoz: Sandoz Inc. makes it easier to swallow the cost of prescription medicines. As the US arm of Swiss giant Novartis' generic Sandoz International division, the firm is one of the largest generic drugmakers in the US, manufacturing and selling more than 200 generic oral-dosage drugs

Product commercialization
For each of its products, EGRX intends to enter the market no later than the first generic drug, allowing it to substantially convert the market to its product by addressing the needs of stakeholders who ultimately use its products.

EGRX believes it can further extend commercial duration through new intellectual property protection and/or orphan drug exclusivity and three years of regulatory exclusivity as provided under the Hatch-Waxman Act, as applicable.

Since its inception, EGRX has focused on identifying attractive product candidates for its approach under the 505(b)(2) regulatory pathway.

Growth plan
In the future, EGRX intends to commercialize products independently in the United States, while outside of the United States, EGRX intends to utilize partners for the commercialization of products.

As part of this strategy, EGRX intends to establish a small, specialty sales force that will target group purchasing organizations, hospital groups and key stakeholders in acute care settings, primarily hospitals and infusion centers.

EGRX expects the impact on operating results of this commercialization strategy will be that EGRX will receive revenue from direct sales, and royalty income, and income from collaborative arrangement will be a less significant part of revenues.

Intellectual property
EGRX is the exclusive licensee under its license with Lyotropic to a family of patents and applications that relate to low volume formulations of dantrolene, and methods of treatment using dantrolene.

There are three issued U.S. patents, and one pending U.S. patent application, along with foreign counterparts that include both issued patents and pending applications.

The issued U.S. patents (US 8,110,225, US 7,758,890 and US 8,604,072) cover low volume formulations of dantrolene in reconstitutable and in ready to use liquid form. EGRX expects that the issued patents will expire no later than July 1, 2025, and the applications, if issued, will expire no later than June 13, 2022.

EGRX is the sole owner of five pending U.S. patent applications, and six corresponding foreign filings for patent applications in a number of jurisdictions covering various formulations and methods of use of bendamustine. EGRX is currently prosecuting these applications, which, if issued, would expire no later than March 15, 2033.

EGRX is the co-owner, with The Medicines Company, of two issued U.S. patents (US 7,713,928 and US 7,803,762) that cover ready to use formulations and methods of treatment of bivalirudin, and there are no pending applications or foreign filings. EGRX expects that its issued patents will expire no later than August 20, 2029.

Competition

EGRX's competitors include organizations such as major multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies and generic drug companies.

5% stockholders

ProQuest and its affiliates 43.3%

General Electric Pension Trust 9.0%

JAFCO Super V3 Investment Limited Partnership 8.1%

Prudential Jennison Health Sciences Fund, a series of Prudential Sector Funds 5.9%

Scott Tarriff 17.9%

Use of proceeds

EGRX expects to net $44.5 million from its IPO. Proceeds are allocated as follows:

$30 million to continue to invest in its research and development program;

$7 to $10 million to continue to expand its U.S. and international sales and marketing efforts; and

the balance for working capital and general corporate purposes.

Disclaimer: This ERGX IPO report is based on a reading and analysis of ERGX'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: Eagle Pharmaceuticals