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Summary

  • Women's health specialty pharmaceutical company focused on the development and commercialization of new prescription contraceptive 'patch' products.
  • In clinical trials AGRX is having an issue with non-compliance, which they say drives the pregnancy rate higher than alternatives.
  • Lost $117 million to-date and has no strategic partners.

Based in Princeton, NJ, Agile Therapeutics (NASDAQ:AGRX) scheduled a $60 million IPO on the Nasdaq with a market capitalization of $181 million at a price range midpoint of $13 for Thursday, May 22, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents
Manager, Joint managers: RBC Capital Markets, William Blair & Company

Co-Managers: Cantor Fitzgerald, Janney Montgomery Scott

End of lockup (180 days): Tuesday, November 18, 2014

End of 25-day quiet period: Monday, June 16, 2014

Summary
AGRX is a women's health specialty pharmaceutical company focused on the development and commercialization of new prescription contraceptive 'patch' products.

In clinical trials AGRX is having an issue with non-compliance, which they say drives the pregnancy rate higher than alternatives.

Before risk issues were identified with the first marketed patch, it achieved rapid market uptake and quickly captured approximately 10% of the CHC (combined hormonal contraceptive) market.

AGRX has lost $117 million to-date and has no strategic partners.

Valuation

Glossary

Valuation Ratios

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% offered

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Cap (MM)

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in IPO

Agile Therapeutics (AGRX)

$181

n/a

-16.1

3.2

3.3

33%

Conclusion
The rating on AGRX is neutral.

It all depends on the results of Phase 3 trials expected to begin in Q3 '14.

If AGRX's Phase 3 clinical trials are successful, then AGRX will be a big stock.

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

Business

AGRX is a women's health specialty pharmaceutical company focused on the development and commercialization of new prescription contraceptive products. Its product candidates are designed to provide women with contraceptive options that offer greater convenience and facilitate compliance.

AGRX's lead product candidate, TwirlaTM, also known as AG200-15, is a once-weekly prescription contraceptive patch currently in Phase 3 clinical development.

AGRX anticipates receiving data from its Phase 3 trial by the end of 2015, and, if approved, AGRX plans to launch Twirla in the United States through a focused specialty sales force.

Twirla is based on AGRX's proprietary transdermal patch technology, called Skinfusion®, which is designed to provide advantages over currently available patches and is intended to optimize patch adherence and stability and patient comfort.

Twirla is a combined hormonal contraceptive, or CHC, patch that contains the active ingredients ethinyl estradiol, or EE, which is a synthetic estrogen, and levonorgestrel, or LNG, which is a type of progestin, a synthetic steroid hormone, both of which have an established history of efficacy and safety in currently marketed combination low-dose, oral contraceptives.

Twirla is designed to consistently deliver both hormones over a seven-day period at levels comparable to currently marketed low-dose oral contraceptives.

By delivering these active ingredients over seven days, in a comfortable, convenient and easy-to-use weekly patch, Twirla is designed to promote enhanced patient compliance.

Market

The U.S. hormonal contraceptive market, with total market sales of $5.6 billion in 2013, represents the greatest opportunity for Twirla.

Over half of those sales were generated by branded products.

Non-hormonal and hormonal alternatives

Contraceptive methods, other than sterilization, can be divided into non-hormonal and hormonal alternatives.

Non-hormonal contraceptive products available in the United States include the diaphragm, male condom and female condom.

There are several methods of hormonal contraception available in the United States, including oral contraceptives, a vaginal ring, intrauterine contraceptive devices, or IUDs, subcutaneous implants, injectables and a transdermal patch which is available in branded and generic versions.

Over the years, the doses of EE most commonly included in CHCs have steadily decreased to 35 micrograms per day or below, due to associated safety risks of higher EE doses.

The currently approved transdermal patch products deliver EE at a level that is 60% higher than that delivered with low-dose oral contraceptives containing 35 micrograms of EE.

As a result, the currently approved patch products carry a black box warning describing safety risks associated with this higher level of EE.

Before these issues were identified with the first marketed patch, it achieved rapid market uptake and quickly captured approximately 10% of the CHC market.

AGRX believes there is an unmet market need for a low-dose transdermal patch as a contraceptive option that does not carry the additional safety risks associated with higher levels of EE.

Clinical trials

AGRX has conducted a comprehensive clinical program enrolling over 2,100 women in Phase 1, Phase 2 and Phase 3 trials, over 1,500 of whom received Twirla.

In the larger of the two completed Phase 3 trials, 485 women received Twirla for 12 months. In Phase 1 and Phase 2 clinical trials, AGRX demonstrated that Twirla delivers levels of both EE and LNG to the blood stream that are consistent with current low-dose oral contraceptives.

In AGRX has two completed Phase 3 clinical trials that enrolled over 1,900 women in the aggregate for up to 12 months, AGRX demonstrated that Twirla generally had comparable efficacy and tolerability to an approved low-dose oral contraceptive.

Across all clinical trials, Twirla was generally well tolerated and had a favorable safety profile.

Phase 3

In Phase 3 trials, the primary measure of efficacy is the Pearl Index, or PI, which is a measure of the rate of unintended pregnancies experienced by women in the study.

Specifically, the PI is expressed as the number of pregnancies per 100 woman-years of use.

The PI values in the pooled completed Phase 3 trials for both the Twirla patch, 5.76, and the combined oral contraceptive control, 6.72, were higher than the PI range of 1.34 to 3.19 for products approved by the U.S. Food & Drug Administration, or FDA, within the past ten years.

AGRX believes that the results for both the patch and oral contraceptive control arms in AGRX's completed Phase 3 trials were affected primarily by issues with study conducted at several study sites, including rapid enrollment which led to an inability to manage the study population, poor subject compliance and high rates of loss to follow-up.

The results were also likely affected in part by the study population, which differed in composition from the populations enrolled in trials of previously approved CHCs.

AGRX's Phase 3 trials had a high number of new users and minorities as compared to other CHC clinical trials.

In particular, many contraceptive trials have enrolled a high proportion of subjects who immediately switched from other hormonal contraceptives, referred to as current users.

For example, the subject population for the primary contraceptive efficacy clinical trial for the product Yaz® consisted of 60% current users and for the North American clinical trial for the product Natazia® consisted of 59% current users.

However, only 17.8% of subjects in AGRX's larger Phase 3 trial randomized to receive Twirla were current users, and therefore, AGRX had a higher than usual proportion of new users of contraception.

Notably, there was a higher incidence of noncompliance in new users as compared to experienced users.

In AGRX's Phase 3 studies, noncompliance, as verified by nondetectable serum levels of LNG and EE in a subject, was approximately three times as high in new users as compared to experienced users in both the Twirla and oral contraceptive arms of the study.

Higher rates of noncompliance in contraceptive studies often correlate with a higher contraceptive failure rate.

New Drug Application (NDA)

AGRX filed a Section 505(b)(2) New Drug Application, or NDA, for approval of Twirla by the FDA, which is required before marketing a new drug in the United States.

AGRX's 505(b)(2) NDA relies in part on clinical trials that AGRX conducted and in part on the FDA's findings of safety and efficacy from investigations for approved products containing the active ingredients and published scientific literature for which we have not obtained a right of reference.

The FDA has indicated in a Complete Response Letter, or CRL, that our NDA was not sufficient for approval as originally submitted, due in part to the higher than desired PI.

The FDA recommended that AGRX conduct an additional Phase 3 trial with a simplified clinical trial design and improved study conduct, including site monitoring and data collection procedures.

The FDA also required additional information relating to the laser etching of label information on each patch and required that the patch used in the new trial utilize the same etching as will be used for the commercial product, in order to demonstrate that it does not adversely affect the performance of the patch.

Furthermore, the FDA also requested in the CRL additional information on controls and release specifications related to the patch, and manufacturing and control information related to the Drug Master File of one of the raw materials in Twirla.

After multiple communications with the FDA, AGRX received significant guidance as to what additional clinical development and other activities need to be completed prior to approval. In accordance with the FDA's advice and comments.

AGRX is preparing to conduct an additional Phase 3 clinical trial and expects to enroll the first subject in the third quarter of 2014. Based on the guidance received from the FDA, AGRX believes that this additional trial will address all of the clinical issues raised in the CRL.

Dividend Policy

No dividends are planned.

Intellectual Property

AGRX has five issued U.S. patents which cover Twirla that it intends to list in the Orange Book, the last of which expires in 2028.

The Orange Book lists drug products, including related patent and exclusivity information, approved by the FDA under the Federal Food, Drug, and Cosmetic Act.

If a patent is listed in the Orange Book, potential competitors seeking approval of drug products under an Abbreviated New Drug Application, which provides for the marketing of a generic drug product that has the same active ingredients, dosage form, strength, route of administration, labeling, performance characteristics and intended use, among other things, of a previously approved product, or a 505(b)(2) application, for which the listed drug is a reference product, must provide a patent certification in their application stating either that (1) no patent information on the drug product has been submitted to the FDA; (2) such patent has expired; (3) the date on which such patent expires; or (4) such patent is invalid or will not be infringed upon by the manufacture, use or sale of the drug product for which the application is submitted.

In addition, AGRX continues to prosecute additional patent applications relating to Twirla, as well as its other product candidates, both in the United States and internationally.

The intellectual property behind all of AGRX's product candidates in the pipeline and its Skinfusion technology consists of patent families developed and wholly-owned by AGRX. There are no royalties or payments owed to third parties on AGRX's Skinfusion technology or any of its product candidates.

Competition
Potential competitors include large, well-established pharmaceutical companies, and specialty pharmaceutical sales and marketing companies.

These companies include Merck & Co., Inc., or Merck, which markets Nuvaring®, Actavis plc, or Actavis, and several branded and generic contraceptives including Loestrin® 24 and LoLoestrin®, Teva Pharmaceutical Industries Ltd., or Teva, which markets several branded and generic contraceptives including Gianvi® and Quartette®, Bayer AG, or Bayer, which markets Beyaz® and Mirena®, Johnson & Johnson, which markets Ortho-Tri-Cyclen® Lo and Ortho Evra®, Pfizer Inc., which markets Alesse® and Mylan Inc. which markets Xulane™, a generic version of Ortho Evra. Additionally, several generic manufacturers currently market and continue to introduce new generic contraceptives, including Sandoz International GmbH, Glenmark Pharmaceuticals Ltd., Lupin Pharmaceuticals, Inc., and Amneal Pharmaceuticals LLC.

5% stockholders

ProQuest Investments 30.4%

Care Capital Investments 26.6%

Investor Growth Capital 26.6%

Aisling Capital III, L.P. 8.9%

Use of proceeds

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

$31 million of the proceeds from this offering to fund an additional Phase 3 clinical trial for Twirla, its lead product candidate.

$4 million to $6 million for the completion of the equipment qualification and validation related to the expansion of Corium's manufacturing capabilities;

$2 to $4 million for the development of AGRX's product candidate pipeline, including Twirla line extensions; and

the remainder of the net proceeds for making scheduled principal and interest payments beginning in February 2015 on AGRX's outstanding term loan with Oxford Finance, LLC and for working capital and general corporate purposes.

Disclaimer: This AGRX IPO report is based on a reading and analysis of AGRX'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: Agile Therapeutics