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Summary

  • Late stage pharmaceutical company.
  • Locilex™ is initially being targeted for the treatment of mild infections of diabetic foot ulcers.
  • DPRX believes that Locilex™ may be approved by the FDA within 24 months of commencing Phase 3 enrollment, scheduled for Q2 2014.

Based in New York, NY, Dipexium Pharmaceuticals (NASDAQ:DPRX) scheduled a $30 million IPO on the Nasdaq with a market capitalization of $100 million at a price range midpoint of $13 for Thursday, March 13, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents
Manager: Oppenheimer & Co

Co-Manager: Feltl and Company

Summary
DPRX is a late stage pharmaceutical company focused on the development and commercialization of Locilex™ (pexiganan acetate cream 1%), a novel, first-in-class, broad spectrum, topical antibiotic. Locilex™ is a chemically synthesized, 22-amino acid peptide isolated from the skin of the African Clawed Frog.

DPRX believes that Locilex™ may be approved by the FDA within 24 months of commencing the Phase 3 enrollment, scheduled for Q2 2014.

Valuation

Glossary

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

Dipexium Pharmaceuticals

$100

n/a

-6.3

3.3

3.3

30%

Conclusion
Locilex™ is initially being targeted for the treatment of mild infections of diabetic foot ulcers (or Mild DFI). In 2011, the market for diabetic foot infection therapeutics worldwide was $1.46 billion.

DPRX believes that Locilex™ may be approved by the FDA within 24 months of commencing the Phase 3 enrollment, scheduled for Q2 2014.

The DPRX rating is neutral.

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

Business

DPRX is a late stage pharmaceutical company focused on the development and commercialization of Locilex™ (pexiganan acetate cream 1%), a novel, first-in-class, broad spectrum, topical antibiotic. Locilex™ is a chemically synthesized, 22-amino acid peptide isolated from the skin of the African Clawed Frog.

Its novel mechanism of action kills microbial targets through disruption of bacterial cell membrane permeability. Locilex™ is initially being targeted for the treatment of mild infections of diabetic foot ulcers (or Mild DFI). In 2011, the market for diabetic foot infection therapeutics worldwide was $1.46 billion.

Recent patent
DPRX recently received a U.S. patent on the formulation of Locilex™ that expires in June 2032. DPRX's primary objective is to establish Locilex™ as the standard of care for the treatment of patients with Mild DFI.

Thereafter, DPRX's growth strategy includes potentially expanding the indications for Locilex™ to include moderate infections of diabetic foot ulcers (or Moderate DFI) and certain other mild or moderate skin and skin structure infections in superficial wounds.

Regulatory approval path
DPRX believes that it has a clear clinical and regulatory pathway with the potential for near term U.S. Food and Drug Administration (or FDA) approval of Locilex™.

DPRX believes that Locilex™ may be approved by the FDA within 24 months of commencing the Phase 3 enrollment. DPRX has reached agreement with the FDA through a special protocol assessment (or SPA) for its Phase 3 program. DPRX intends to conduct and complete two pivotal Phase 3, double blind, placebo-controlled, superiority studies.

DPRX expects to begin enrollment in these studies in the second quarter of 2014, with top line data from the Phase 3 studies anticipated in the first quarter of 2015.

Concurrently, DPRX also intends to conduct two separate Phase 1 skin irritation and skin sensitization studies, which are expected to commence in the first quarter of 2014.

If the data from DPRX's Phase 3 studies are sufficient to meet the primary endpoints, DPRX expects to submit its new drug application (or NDA) for Locilex™ in the second half of 2015. DPRX expects to receive a response from the FDA within six months of its NDA submission.

Dividend Policy

No dividends are planned.

Intellectual Property

DPRX holds rights to a U.S. patent covering its proprietary formulation of Locilex™ and the method of using it for the treatment of skin and wound infections (U.S. Patent Number 8,530,409).

This patent was granted in September 2013 and expires in the U.S. in June 2032. The patent incorporates discoveries made by Dow Pharmaceutical Sciences, Inc. (later acquired by Valeant Pharmaceuticals International, Inc.).

The application which gave rise to U.S. Patent No. 8,520,409 was assigned to DPRX in June 2013. In addition, DPRX has filed a Patent Cooperation Treaty (or PCT) application claiming priority to U.S. Patent No. 8,520,409 that will allow it to seek corresponding protection outside of the U.S., including in Europe, Japan, China, Australia, and Korea, as well as in other PCT jurisdictions.

In addition to this patent, DPRX holds an exclusive sublicense to the composition-of-matter patent covering the pexiganan technology (U.S. Patent No. 5,912,231) which expires in June 2016, not including any patent term extension that DPRX expects to seek under the Drug Price Competition and Patent Term Restoration Act of 1984 (or the Hatch-Waxman Act). DPRX acquired this sublicense when it acquired the rights to Locilex™ in April 2010.

Competition

Most of DPRX's competitors are large, well established pharmaceutical or healthcare companies with considerably greater financial, marketing, sales and technical resources than are available to us.

Additionally, many of DPRX's competitors have research and development capabilities that may allow such competitors to develop new or improved products that may compete with Locilex™. DPRX's product could be rendered obsolete or made uneconomical by the development of new products to treat Mild DFI or other acute bacterial skin infections.

Although there are currently no products approved specifically to treat Mild DFI, DPRX anticipates that, if approved, Locilex™ will compete with other anti-infective products that are marketed for the general treatment of diabetic foot ulcers.

These include systemic products that have been generally accepted by the ISDA to treat DFI at other levels of severity such as linezolid (marketed by Pfizer, Inc. as Zyvox), piperacillin/tazobactam (marketed by Pfizer, Inc. as Zosyn), ertapenam (marketed by Merck & Co. as Invanz); generic products recommended by the IDSA for off-label use in the treatment of all severity levels of DFI such as dicloxacillin, clindamycin, cephalexin, ofloxacin, trimethoprim, amoxicillin-clavulanate, and others; as well as antimicrobial wound care dressings such as medicinal grade honey and antiseptics such as silver and iodine.

5% stockholders

David P. Luci 34.2%

Robert J. DeLuccia 34.1%

Use of proceeds

DPRX expects to net $27.2 million from its IPO. Proceeds are allocated as follows:

Completion of clinical trials and NDA submission for Locilex, $12.5 million.

Preliminary commercialization expenses in anticipation of FDA approval of Locilex, $7.5 million.

Expansion of approved uses of Locilex, $1.5 million.

Working capital and other general corporate purposes, $5.7 million.

Disclaimer: This DPRX IPO report is based on a reading and analysis of DPRX'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: Dipexium Pharmaceuticals