Seeking Alpha
Long-term horizon
Profile| Send Message|
( followers)  

NuPathe (NASDAQ:PATH) completed its initial public offering (IPO) on 8/6/10 at $10 per share for 5 million shares of common stock, raising $43 million in net proceeds. The Company's stock is currently trading at a 20% discount at $8 per share with a market cap of $116 million and expects to submit a New Drug Application (NDA) through the 505(b)(2) pathway, representing a novel formulation of a previously approved drug compound.

NuPathe ended 2Q10 with $51.5 million in cash/equivalents, which includes net proceeds received from the IPO in early August. The Company reported a net loss of $5.6 million during 2Q10, including $3.3 million for research & development (R&D).

NuPathe has completed its pivotal Phase 3 program for ZELRIX (Sumatriptan single-use, four-hour skin patch for acute migraine headaches) and expects to file a NDA with the FDA during 4Q10, seeking approval for the treatment of acute migraine headaches. In addition, the Company is conducting two ongoing 12-month, open-label safety studies with ClinicalTrials.gov IDs NCT00806546 and NCT00792103.

ZELRIX utilizes the Company's SmartRelief drug delivery technology, which differentiates the product from passive skin patches by utilizing an active transdermal delivery system based on iontophoresis to control both the amount and rate of medication delivery for molecules such as sumatriptan that cannot be passively delivered through the skin. NuPathe plans to assemble an in-house specialty pharmaceutical sales force to market ZELRIX in the US upon potential FDA approval.

The primary endpoint for ZELRIX in the Phase 3 pivotal studies was achieving pain-free status for migraine sufferers at two hours versus a lower threshold of achieving pain relief at two hours for previously approved triptan drugs. ZELRIX demonstrated a 30-minute onset of pain relief in the studies and while the injection route for triptans provides the fastest relief, it is the least well tolerated by patients (e.g. chest tightness side effects) and nearly one-half of patients experience side effects with injected triptans. In addition, the nausea and vomiting that is often associated with migraines may affect the oral delivery of triptan drugs, which also have issues with inconsistent absorption, while ZELRIX is designed as a four-hour patch that can be delivered immediately by the patient upon activation.

NuPathe's other delivery technology is LAD (long-acting delivery) with two preclinical candidates in development, including NP201 (the continuous symptomatic treatment of Parkinson's disease with expected IND during 1H11 to begin clinical testing) and NP202 (the long-term treatment of schizophrenia and bipolar disorder with expected IND filing to begin clinical testing in 2012).

The prospects for FDA approval of ZELRIX appear excellent since the product is based on a widely used migraine drug that is developed in a novel skin patch formulation designed to address the nausea/vomiting that may accompany migraines and greatly reduce the effectiveness of oral triptan drugs. In addition, ZELRIX met a higher standard in its pivotal studies by achieving pain-free status at two hours post-dose and the high incidence of side effects associated with injected triptans provides the basis for a skin patch formulation with a quick onset of action due to its active delivery system.

Risks to NuPathe would include regulatory issues or potential delays since this represents the Company's first FDA filing. If FDA approval is achieved, the Company will be competing in a market for triptan drugs that is now dominated by generic formulations. In addition, NuPathe will need to achieve favorable co-pay and formulary status with third-party payers such as insurance companies to achieve commercial success and widespread use by patients. Finally, the Company plans to utilize an in-house sales force to market the drug in the US and ZELRIX represents the first potential product that it would market, so there is no track record of success.

Disclosure: Long PATH

Source: NuPathe Trades at Discount to IPO Price with Near-Term FDA Filing