IPO Preview: Adamas Pharmaceuticals

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 |  About: Adamas Pharmaceuticals, Inc. (ADMS)
by: IPOdesktop

Summary

Specialty pharmaceutical company driven to improve the lives of those affected by chronic disorders of the central nervous system.

Priced at 2.2 times book.

Post IPO will have 47% of its market cap in cash.

Based in Emeryville, CA, Adamas Pharmaceuticals (NASDAQ:ADMS) scheduled a $51 million IPO on the Nasdaq with a market capitalization of $279 million at a price range midpoint of $17 for Thursday, April 10, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents

Manager, Joint managers: Credit Suisse, Piper Jaffray

Co-Managers: William Blair, Needham

End of lockup (180 days): Tuesday, October 7, 2014

End of 25-day quiet period: Monday, May 5, 2014

Summary
ADMS is a specialty pharmaceutical company driven to improve the lives of those affected by chronic disorders of the central nervous system, or CNS.

Valuation

Glossary

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

Adamas Pharmaceuticals

$279

3.9

5.5

2.2

2.2

18%

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Conclusion

ADMS has an impressive collaboration with Forest Labs (NYSE:FRX), $25 billion market capitalization. See 'Forest Labs' below.

ADMS is priced at 2.2 times book and post IPO will have 47% of its market cap in cash.

The rating on ADMS is buy.

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

Business

ADMS is a specialty pharmaceutical company driven to improve the lives of those affected by chronic disorders of the central nervous system, or CNS.

ADMS achieves this by enhancing the pharmacokinetic profiles of proven drugs to create novel therapeutics for use alone and in fixed-dose combination products. ADMS is developing its lead wholly owned product candidate, ADS-5102, for a complication of Parkinson's disease known as levodopa induced dyskinesia, or LID, and as a treatment for chronic behavioral symptoms associated with traumatic brain injury.

Clinical trials

ADMS has successfully completed a Phase 2/3 clinical study in LID and intend to initiate a Phase 3 registration trial in 2014. ADMS's late-stage therapeutics portfolio also includes an NDA-submitted product candidate, MDX-8704, being co-developed with Forest Laboratories and an approved product, Namenda XR, which Forest developed and is marketing in the United States under a license from ADMS.

Forest Laboratories , $25 billion market cap

Prior to November 2012, ADMS was developing ADS-8704, a fixed-dose combination of controlled-release memantine and donepezil.

Pursuant to its license agreement with Forest, ADMS exclusively licensed to Forest certain U.S. intellectual property rights relating to controlled-release memantine and therapies including memantine.

Forest has continued the ADS-8704 program under the name MDX-8704. Under its license agreement with Forest, ADMS received a $65 million upfront payment in November 2012 and two $20 million milestone payments in the fourth quarter of 2013.

ADMS is eligible to receive up to an additional $55 million in payments based upon the achievement of certain regulatory milestones prior to and including the first FDA approval of MDX-8704.

Dividend Policy

No dividends are planned.

Intellectual Property

As of March 25, 2014, ADMS owned 16 issued U.S. patents, eight U.S. patent applications and additional patents and patent applications in other jurisdictions.

Competition

ADMS may face competition from large pharmaceutical and biotechnology companies, smaller pharmaceutical and biotechnology companies, specialty pharmaceutical companies, generic drug companies, academic institutions, government agencies and research institutions and others.

5% stockholders

Entities affiliated with Mohr Davidow Ventures 30.9%

aeris CAPITAL Equity Investments, L.P. 16%

Entities affiliated with DAG Ventures 12%

NCD Investors, A Delaware Multiple Series LLC 6.3%

Gregory Went, Ph.D. 13.6%

William Ericson 31.1%

Use of proceeds

ADMS expects to net $44 million from its IPO. Proceeds, along with cash on hand, are allocated as follows:

$30 million to fund its Phase 3 registration trial of ADS-5102 in LID and related activities;

$30 million to fund a Phase 2/3 study of ADS-5102 in a second CNS indication and related activities;

$30 million to fund additional product development, including clinical trials; and

the remainder for working capital, capital expenditures and other general corporate purposes, which may include acquiring or licensing products, businesses or technologies, although ADMS has no present commitments for any such acquisitions or licenses.

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

SEC Documents

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.