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Summary

  • NERV is a clinical-stage biopharmaceutical company focused on the development and commercialization of a portfolio of central nervous system product candidates.
  • NERV has completed Phase 1 clinical trials.
  • The price-to-book is 2, which is very low for a biopharma.

Based in Cambridge, MA, Minerva Neurosciences (NASDAQ:NERV) scheduled a $69 million IPO on the Nasdaq with a market capitalization of $186 million at a price range midpoint of $11 for Thursday 26, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents

Manager, Joint managers: Jefferies

Co-Managers: Baird, JMP Securities

Summary

NERV is a clinical-stage biopharmaceutical company focused on the development and commercialization of a portfolio of product candidates to treat patients suffering from central nervous system, or CNS, diseases.

Has completed Phase 1 clinical trials.

Valuation

Glossary

Valuation Ratios

Mrkt Cap (MM)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

annualizing Q1 '14

Minerva Neurosciences

$186

no rev

-13.7

2.0

3.4

33%

Conclusion

NERV is a small IPO with Jefferies as the manager, which is a plus.

The price-to-book is 2, which is very low for a biopharma.

Existing stockholders have indicated an interest in buying up to $15 million (22%) of the IPO.

NERV has only completed Phase 1 clinical trials.

The rating on NERV is neutral.

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

Business

NERV is a clinical-stage biopharmaceutical company focused on the development and commercialization of a portfolio of product candidates to treat patients suffering from central nervous system, or CNS, diseases.

Proprietary compounds

Leveraging its domain expertise, NERV has acquired or in-licensed four development-stage proprietary compounds that it believes have innovative mechanisms of action with potentially positive therapeutic profiles.

NERV's lead product candidates are MIN-101, a compound NERV is developing for the treatment of patients with schizophrenia, and MIN-117, a compound it is developing for the treatment of patients suffering from major depressive disorder, or MDD.

In addition, its portfolio includes MIN-202, a compound NERV is co-developing for the treatment of patients suffering from primary and secondary insomnia, and MIN-301, a compound it is developing for the treatment of patients suffering from Parkinson's disease.

NERV believes its innovative product candidates have significant potential to transform the lives of a large number of affected patients and their families who are currently not well-served by available therapies in each of their respective indications.

Exclusively licensed

NERV exclusively licensed MIN-101 from Mitsubishi Tanabe Pharma Corporation, or MTPC, in 2007 with the rights to develop, sell and import MIN-101 globally, excluding most of Asia.

MIN-101 clinical trials

In a Phase IIa clinical trial, a statistically significant improvement of negative symptoms and a non-statistically significant trend toward the improvement of positive and cognitive symptoms and overall psychopathology was observed after three months of administration of MIN-101 in a twice-a-day formulation.

The trial also showed that MIN-101 could have sleep promoting effects in contrast to currently available therapies and had no negative impact on sleep as measured by polysomnography.

NERV plans to initiate a small clinical trial in the second quarter of 2014 to confirm prior Phase I results, using a once a day formulation, in preparation for conducting a Phase IIb clinical trial of MIN-101 in Europe in the fourth quarter of 2014.

MIN-117 clinical trials

NERV believes that the results of two Phase I clinical trials of MIN-117 in healthy subjects that explored doses higher than the anticipated therapeutic dose, and pre-clinical studies suggest that many of the typical side effects commonly experienced by patients taking existing pharmaceutical treatments for MDD may not be associated with MIN-117 at therapeutic dose levels.

Based on a Phase I clinical trial, MIN-117 may have a positive effect on sleep, a potential biomarker for drug efficacy for MDD, suggesting the utility of further study for the treatment of MDD.

NERV plans to examine the effect of the intended therapeutic doses of MIN-117 in future studies with a Phase IIb clinical trial in Europe in approximately 450 subjects, examining two doses of MIN-117, in the second half of 2014.

Merger & acquisition

In November 2013, NERV merged with Sonkei Pharmaceuticals Inc., or Sonkei, a clinical-stage biopharmaceutical company and, in February 2014, NERV acquired Mind-NRG SA, or Mind-NRG, a pre-clinical-stage biopharmaceutical company.

NERV refers to these transactions as the Sonkei Merger and Mind-NRG Acquisition, respectively. Sonkei licensed MIN-117 from MTPC in 2008 with the rights to develop, sell and import MIN-117 globally, excluding most of Asia.

With the acquisition of Mind-NRG, NERV obtained exclusive rights to develop and commercialize MIN-301.

NERV has also entered into a co-development and license agreement with Janssen, a Johnson & Johnson (NYSE:JNJ) for the exclusive rights to develop and commercialize MIN-202 in the European Union, subject to royalty payments to Janssen, and royalty rights for any sales outside the European Union, and will obtain such rights upon the closing of this offering.

No regulatory approvals

NERV has not received regulatory approvals to sell any of its product candidates, and it has not generated any revenue from the sales or license of its product candidates.

NERV has incurred significant operating losses since inception.

In addition, neither Sonkei nor Mind-NRG have received any regulatory approvals to sell any product candidates and have also incurred significant operating losses since their respective inceptions in 2008 and 2010.

Dividend Policy

No dividends are planned.

Intellectual Property

Patent applications have been filed by NERV or its licensors covering compositions of matter for and methods of using its product candidates MIN-101, MIN-117, MIN-202 and MIN-301, and other inventions.

NERV also relies on trade secrets and careful monitoring of its proprietary information to protect aspects of its business that are not amenable to, or that NERV does not consider appropriate for, patent protection.

Competition

NERV faces competition from many different sources, including biopharmaceutical companies, generic drug and biosimilar companies, drug delivery companies and academic and research institutions.

Many of its potential competitors have substantially greater financial, technical and human resources and greater experience in the development of product candidates, obtaining EMA, FDA and other regulatory approvals of products and the commercialization of those products.

Consequently, NERV's competitors may develop products for the treatment of the neuropsychiatric diseases that NERV is targeting that are more effective, better tolerated, more useful and less costly.

Further, the cause and pathophysiology of neuropsychiatric diseases are not fully understood, and additional scientific understanding and future drug or non-drug therapies may make NERV's product candidates obsolete.

In addition, NERV's ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic and biosimilar products.

Generic products are currently on the market for the indications NERV is pursuing, and additional products are expected to become available on a generic basis over the coming years.

If its product candidates achieve marketing approval, NERV expects that it will be priced at a significant premium over competitive generic products and potentially biosimilars.

5% stockholders

Remy Luthringer 10.9%

Funds affiliated with Care Capital 34.9%

Funds affiliated with Index Ventures 40.3%

Use of proceeds

NERV expects to net $52 million from its IPO. Proceeds are allocated as follows:

$19.8 million to fund MIN-101 through Phase II clinical development;

$18.0 million to fund MIN-117 through Phase II clinical development;

$5.0 million to fund MIN-202 through Phase I clinical development;

$5.6 million to fund MIN-301 through Phase I clinical development;

$0.6 million to repay the April Bridge Loan;

$1.0 million to repay the May Bridge Loan;

$0.7 million (as converted) to pay the ProteoSys License Fee with respect to MIN-301; and

the remainder for working capital and general corporate purposes

Disclaimer: This NERV IPO report is based on a reading and analysis of NERV'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: Minerva Neurosciences