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Summary

  • Specialty pharmaceutical company that leverages its broad experience in transdermal and transmucosal delivery systems.
  • Global value of the market for systemic transdermal products, including patches, was approximately $20 billion in 2010, and is expected to grow to approximately $30 billion by 2015.
  • Marketed products include four Crest Advanced Seal Whitestrips products.

Based in Menlo Park, CA, Corium International (NASDAQ:CORI) scheduled a $60 million IPO on the Nasdaq, with a market capitalization of $184 million at a price range mid-point of $11 for Thursday, April 3, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents

Manager, Joint Managers: Jefferies, Leerink Partners

Co-Managers: Needham & Co., FBR Capital Markets

End of lockup (180 days): Tuesday, September 30, 2014

End of 25-day quiet period: April 28, 2014

Summary

CORI is a commercial-stage biopharmaceutical company focused on the development, manufacture and commercialization of specialty pharmaceutical products that leverages its broad experience in transdermal and transmucosal delivery systems

Valuation

Glossary

Valuation Ratios

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Corium International

$184

4.4

-23.0

6.4

8.3

33%

Conclusion

The rating on CORI is positive, based on the pipeline.

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

Business

CORI is a commercial-stage biopharmaceutical company focused on the development, manufacture and commercialization of specialty pharmaceutical products that leverage its broad experience in transdermal and transmucosal delivery systems.

Market growth

According to Datamonitor, the global value of the market for systemic transdermal products, including patches, was approximately $20 billion in 2010, and is expected to grow to approximately $30 billion by 2015.

Two proprietary platforms

CORI's two proprietary platforms, Corplex and MicroCor, separately address some of the primary shortcomings of traditional transdermal drug delivery. CORI believes its track record within the industry demonstrates an ability to develop commercially successful products.

Six marketed products

Together with its partners, CORI has successfully developed six marketed products in the prescription drug and consumer markets, and CORI is the sole commercial supplier of each of those products for its marketing partners.

These marketed products are Clonidine Transdermal Delivery System, or TDS, Fentanyl TDS and four Crest Advanced Seal Whitestrips products.

CORI uses its novel transdermal and transmucosal approaches to bring new products to markets with significant opportunities. CORI's development platforms enable transdermal delivery of large molecules, or biologics, including vaccines, peptides and proteins, as well as small molecules that are otherwise difficult to deliver in a transdermal dosage form.

Current products

All of CORI's current products are distributed, promoted and marketed by its partners. CORI's partners include The Procter & Gamble Company, or P&G (NYSE:PG), Par Pharmaceutical, Inc. (Pending:PRX), Teva Pharmaceutical USA, Inc. (NYSE:TEVA) and Agile Therapeutics, Inc., as well as several other multinational pharmaceutical companies.

Most of these entities have substantially greater financial and operating resources than CORI does, including global operations.

CORI has never had, nor does CORI currently have, its own sales force or marketing capabilities. CORI does not control the market prices that its marketing partners set for CORI's products and, consequently, CORI does not control the market shares or rates of adoption for its products.

Crest Whitestrips

CORI's partnership with P&G began in 2005 with the development of Crest Whitestrips, which P&G commercially launched in 2009.

P&G currently sells Whitestrips throughout North America. CORI's total revenues from P&G were $11.8 million in fiscal 2013 and $3.0 million for the three months ended December 31, 2013.

Teva

CORI's partnership with Teva began in 2004 with Teva's predecessor, Barr Laboratories. Together with Barr, CORI developed Clonidine TDS, which Teva commercially launched in 2010.

Teva currently sells Clonidine TDS throughout North America. CORI's total revenues from Teva were $16.7 million in fiscal 2013 and $3.7 million for the three months ended December 31, 2013.

Par Pharmaceutical

CORI's partnership with Par is the result of an FTC-mandated divestiture of the product from Actavis, Inc. in connection with the merger with Watson Pharmaceuticals.

CORI began the development of Fentanyl TDS with Abrika LLLP in May 2002, and Abrika was subsequently acquired by Actavis in 2007.

Actavis commercially launched Fentanyl TDS in 2007. Par currently sells Fentanyl TDS throughout the United States.

CORI's total revenues from Par were $16.6 million in fiscal 2013 and $3.2 million for the three months ended December 31, 2013.

Pipeline

CORI's pipeline includes three partnered products that are the subject of pending drug marketing applications to the U.S. Food and Drug Administration, or FDA. In addition, CORI has 12 partner- or self-funded programs at earlier stages.

AG200-15

The Agile AG200-15 product is a combination hormonal contraceptive patch that contains the active ingredients ethinyl estradiol (an estrogen) and levonorgestrel (a progestrin), both of which have an established history of efficacy and safety in currently marketed combination oral contraceptives. AG200-15 is designed to deliver both hormones at levels comparable to low-dose oral contraceptives.

By delivering these active ingredients over seven days, this product is designed to promote enhanced compliance by patients, with a convenient, easy-to-use format. If approved, the patch will be applied once weekly for three weeks, followed by a week without a patch.

Agile designed AG200-15, CORI performed the process development and manufacturing, and CORI is currently working with Agile to prepare for an additional Phase III clinical trial.

MicroCor hPTH(1-34)

MicroCor hPTH(1-34) is a transdermal system designed to use CORI's MicroCor technology to provide simplified delivery of parathyroid hormone, the active ingredient of Forteo, an injectable product for the treatment of severe osteoporosis.

With a simple one-step application process, short wear time and a favorable pharmacokinetic profile, MicroCor hPTH(1-34) represents, if approved, an opportunity to effectively deliver an improved anabolic therapy and increase patient compliance in the osteoporosis market.

CORI believes MicroCor hPTH(1-34) is the only integrated, single-step application PTH transdermal product currently in clinical development.

CORI has self-funded this program since inception, and is planning to advance it into Phase II clinical trials with proceeds from the IPO. CORI expects to partner with a company active in bone health, women's health or endocrinology to distribute and sell the product, if approved.

Corplex Tamsulosin

Corplex Tamsulosin is a transdermal patch designed to use Corplex technology to provide controlled delivery of tamsulosin, the active ingredient in the leading once-daily capsule product for treatment of benign prostatic hyperplasia, or BPH, marketed under the brand name Flomax.

By providing a controlled and relatively steady level of drug over an extended time, Corplex Tamsulosin is intended to alleviate the side effects associated with peak blood concentrations of the drug in its current oral formulation, and to provide a consistent level of efficacy.

CORI's completed Phase I pharmacokinetic study in healthy subjects demonstrated that Corplex Tamsulosin enabled delivery of the drug at blood concentration levels equivalent to the effective levels provided with the oral dosage form, but with an extended and controlled release profile.

If successfully commercialized, Corplex Tamsulosin could be the only patch available for tamsulosin.

CORI has self-funded this program since inception, and is planning to advance it into Phase II clinical studies with proceeds from the IPO in the first half of 2015. CORI expects to partner this product with a company with marketing experience and capability in the urology field.

Competition

Companies focused on delivering small molecules transdermally include 3M (NYSE:MMM), Johnson & Johnson (NYSE:JNJ), Lohmann Therapy Systems, or LTS, Mylan (NASDAQ:MYL), Hisamitsu (OTC:HTSUF), or Noven, and Actavis (NYSE:ACT).

Companies operating in the microneedle transdermal field include 3M, Zosano (OTCQB:ZOSN), TheraJect and Fujifilm (OTCPK:FUJIF).

Several academic institutions are also conducting research in the microneedle field. In addition to microneedle technologies, there are other methods of transdermal delivery under development for biologics, including heat ablation, laser, ultrasound and radio frequency.

Companies developing and manufacturing transdermal systems for biologics include Becton Dickinson, Vyteris and Zogenix. Some of these companies may be addressing the same therapeutic areas or indications as CORI.

Dividend Policy

No dividends are planned.

Intellectual Property

As of January 31, 2014, CORI held 38 U.S. issued patents and 147 foreign-issued patents (which include granted European patents rights that have been validated in various EU member states), and 28 U.S. pending patents and 60 foreign pending patents relating to its Corplex and MicroCor technologies and products.

Of the issued U.S. patents, 21 relate to composition of matter and 17 relate to use or process. Of the pending U.S. patents, 25 relate to composition of matter and 3 relate to use or process. CORI's foreign patents generally include both composition of matter and use or process claims.

CORI's issued U.S. patents and patent applications will expire between 2019 and 2034. Some of the issued patents and pending patent applications, if issued, may also be eligible for patent term adjustment and patent term restoration, thereby extending their patent terms.

Collaborations

In 2005, the company entered into a multi-faceted collaboration arrangement with The Procter & Gamble Company, or P&G.

The relationship includes a worldwide license to P&G for the use of certain of the company's technologies for products in specific fields in which P&G operates. P&G paid the company a $3.0 million fee for the license, plus additional future milestone payments for each qualifying product that the company develops for P&G. The company has received a $2.0 million milestone for the first series of products developed by the company.

In 2004, the company entered into an arrangement with Barr Laboratories, or Barr, for four generic products. The company entered into three separate agreements with Barr, one in 2006 and two in 2007, to develop and commercialize additional products. In 2008, Teva Pharmaceutical Industries, Ltd., or Teva, acquired Barr. Following this acquisition, Teva discontinued four of these development programs.

5% stockholders

Essex Woodlands 55.7%

Adrian Faasse, Jr. 15.0%

Gary W. Cleary and Nobuko Saito Cleary, Trustees of the Cleary-Saito Family Trust U/D/T dated September 4, 1996 13.6%

Barr Laboratories 10%

Peter D. Staple 6.3%

Gary W. Cleary 13.6%

Ronald Eastman 55.7%

Use of proceeds

CORI expects to net $54 million from its IPO. Proceeds are allocated as follows:

  • $15 million to $18 million for Phase II clinical trials for MicroCor hPTH(1-34) and Corplex Tamsulosin;
  • $15 million to $18 million for scale-up of production capability for its MicroCor products;
  • $5 million to $7 million for formulation and development of its proprietary Corplex products;
  • $2 million to $4 million for advancement of its MicroCor technology;
  • $5.2 million for the repurchase of shares of common stock;
  • Any remaining balance for working capital and other general corporate purposes.

Disclaimer: This CORI IPO report is based on a reading and analysis of CORI'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: Corium International