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Summary

  • Science-driven biopharmaceutical company focused on developing novel differentiated therapeutics for patients with osteoporosis as well as other serious endocrine-mediated diseases.
  • Re-tread, which originally scheduled its IPO for November '13. Re-treads generally don't perform well in the IPO aftermarket.
  • High cash burn rate, indicated by a price/earnings multiple of -6.4. A lower absolute number is worse.
  • Any negative price/earnings ratio with an absolute number below -10 is a cause for concern.

Based in Cambridge, MA, Radius Health (NASDAQ:RDUS) scheduled a $75 million IPO on the Nasdaq with a market capitalization of $389 million at a price range midpoint of $15 for Thursday, May 8, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents

Manager, Joint managers: Jefferies, Cowen & Company

Co-Managers: Canaccord Genuity, Cantor Fitzgerald & Co.

End of lockup (180 days): Tuesday, November 4, 2014

End of 25-day quiet period: Monday, June 2, 2014

Summary

RDUS is a science-driven biopharmaceutical company focused on developing novel differentiated therapeutics for patients with osteoporosis as well as other serious endocrine-mediated diseases.

RDUS is a re-tread, which originally scheduled its IPO for November '13. Re-treads generally don't perform well in the IPO aftermarket.

Also, RDUS has a high cash burn rate, indicated by a price/earnings multiple of -6.4. A lower absolute number is worse. Any negative price/earnings ratio with an absolute number below -10 is a cause for concern.

Valuation

Glossary

Pre-IPO grade-score summary

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

Cap (MM)

Sls

Erngs

BkVlue

TanBV

in IPO

Radius Health (RUDS)

$390

n/a

-6.4

4.9

4.9

39%

Conclusion

The rating on RDUS is negative.

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

Business

RDUS is a science-driven biopharmaceutical company focused on developing novel differentiated therapeutics for patients with osteoporosis as well as other serious endocrine-mediated diseases.

RDUS's lead product candidate is abaloparatide (BA058), a bone anabolic for the treatment of osteoporosis delivered via subcutaneous injection, which, RDUS refers to as Abaloparatide-SC. RDUS is currently in Phase 3 development of Abaloparatide-SC and expects to announce top-line data from this study in late 2014.

If the results are positive, RDUS plans to submit a new drug application, or NDA, in the United States, and a marketing authorization application, or MAA, in Europe, in mid-2015. RDUS holds worldwide commercialization rights to Abaloparatide-SC, other than in Japan, and with a favorable regulatory outcome, RDUS anticipates its first commercial sales of Abaloparatide-SC will take place in 2016.

RDUS is leveraging its investment in Abaloparatide-SC to develop Abaloparatide-TD. RDUS expects this line extension will provide improved patient convenience by enabling administration of abaloparatide through a short-wear-time transdermal patch. RDUS has recently completed a successful Phase 2 proof of concept study.

Clinical product portfolio

RDUS's current clinical product portfolio also includes a novel oral agent, RAD1901, a selective estrogen receptor down-regulator/degrader, or SERD.

RDUS is developing RAD1901 at higher doses, for the treatment of breast cancer brain metastases, or BCBM, and at lower doses as a selective estrogen-receptor modulator, or SERM, for the treatment of vasomotor symptoms such as hot flashes.

Clinical trial

In 2014, RDUS expects to commence a Phase 1 clinical trial to evaluate RAD1901 for the treatment of BCBM, and RDUS previously completed a successful Phase 2 clinical trial of RAD1901 for the treatment of vasomotor symptoms.

Dividend Policy

No dividends are planned.

Intellectual Property

As of December 31, 2013, RDUS owned five issued United States patents, as well as ten pending U.S. patent applications and 45 pending foreign patent applications in Europe and 15 other jurisdictions, and 12 granted foreign patents.

As of December 31, 2013, , RDUS had licenses to nine U.S. patents as well as numerous foreign counterparts to many of these patents and patent applications.

Competition

The development and commercialization of new products to treat the targeted indications of RDUS's product candidates is highly competitive, and its products, if approved, will face considerable competition from major pharmaceutical, biotechnology and specialty pharmaceutical companies, including Amgen, UCB, Merck & Co, Novartis, Lilly, Genentech, Warner Chilcott, Asahi Kasei and Zosano, that are seeking to develop products for similar indications.

5% stockholders

Entities affiliated with MPM Capital 26.5%

Entities affiliated with F2 Bioscience 19.1%

C.C. Consulting A/S 16.5%

Biotech Growth N.V. 8%

The Wellcome Trust Limited, as trustee of The Wellcome Trust 7.5%

Brookside Capital Partners Fund, L.P. 6.4%

BB Biotech Ventures II, L.P. 6.3%

HealthCare Ventures VII, L.P. 6%

Ansbert K. Gadicke, M.D. 26.5%

Use of proceeds

RDUS expects to net $78 million from its IPO. Proceeds are allocated as follows:

$44 million to complete development, submit an NDA and MAA, and fund its efforts to obtain regulatory approval of Abaloparatide-SC;

$8 million to continue collaborative development work with 3M and to initiate the next phase of clinical studies for Abaloparatide-TD;

$5 million to pursue its application for orphan designation and initiate Phase 1 development of RAD1901 for the treatment of BCBM; and

the remainder to begin establishing sales and marketing capabilities to commercialize its product candidates and for working capital and general corporate purposes, including for monthly principal and interest payments on its credit facility and the costs associated with being a public company.

Disclaimer: This RDUS IPO report is based on a reading and analysis of RDUS'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: Radius Health