IPO Preview: Macrocure

Jul.31.14 | About: Macrocure (MCUR)

Summary

MCUR is a regenerative medicine company focused on developing, manufacturing and commercializing novel cell therapy products to address unmet needs in the treatment of chronic and other hard-to-heal wounds.

2.7 times book value. In Phase 3 clinical trials.

Shareholders indicate interest in buying 16.5% on the IPO.

Based in Petach Tikva, Israel, Macrocure (NASDAQ:MCUR) scheduled a $75 million IPO on the Nasdaq with a market capitalization of $264 million at a price range midpoint of $14 for Thursday, July 31, 2014.

The full IPO calendar is available at IPOpremium

SEC Documents

Manager, Co-Managers: Credit Suisse and Jefferies

Joint Managers: Nomura Securities, Oppenheimer & Co.

End of lockup (180 days): Tuesday, January 27, 2015

End of 25-day quiet period: Monday, August 25, 2014

Summary

MCUR is a regenerative medicine company focused on developing, manufacturing and commercializing novel cell therapy products to address unmet needs in the treatment of chronic and other hard-to-heal wounds.

Valuation

Glossary

Valuation Ratios

Mrkt Cap ($mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Macrocure Ltd.

$227

1.5

12.9

2.7

2.7

34%

Click to enlarge

Conclusion

The rating is neutral

Shareholders indicate interest in buying 16.5% on the IPO.

2.7 times book value

In Phase 3 clinical trials.

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

Business

MCUR is a regenerative medicine company focused on developing, manufacturing and commercializing novel cell therapy products to address unmet needs in the treatment of chronic and other hard-to-heal wounds.

Product candidate

MCUR's product candidate, CureXcell, is an advanced wound care, or AWC, therapy to treat such wounds by injecting living human white blood cells that have been activated to facilitate the healing process.

Phase 3 trials

CureXcell is currently in two pivotal, Phase 3, double-blind clinical trials targeting a broad indication for the treatment of diabetic foot ulcers, or DFUs, and venous leg ulcers, or VLUs.

MCUR anticipates results from its DFU clinical trial and interim data from its VLU clinical trial in the second half of 2015.

MCUR expects to submit its Biologics License Application, or BLA, to the United States Food and Drug Administration, or FDA, in late 2016.

MCUR also intends to pursue marketing authorization in Europe with the European Medicines Agency, or EMA. MCUR already holds product approval for CureXcell as a medical device in Israel for the treatment of chronic and other hard-to-heal wounds, and have effectively and safely treated more than 5,000 patients in commercial or clinical study settings in Israel.

To support its development and manufacturing initiatives for CureXcell, MCUR has established operations in Philadelphia, Pennsylvania in the United States and the Tel Aviv region in Israel.

In a 131-patient post-marketing trial conducted in Israel and completed in 2011, CureXcell achieved full closure of hard-to-heal wounds in approximately 71% of patients in a study with a challenging patient population.

In total, CureXcell has completed nine clinical trials to date. In addition to clinical data, MCUR's technologies have been presented in several peer-reviewed publications, and CureXcell has support from key opinion leaders, or KOLs, in the wound care field.

Based on nearly 15 years of clinical data and experience, MCUR believes CureXcell provides patients and physicians significant clinical benefits.

While CureXcell's completed clinical trials support this belief, MCUR's two ongoing Phase 3 clinical trials will be critical in obtaining regulatory approval and demonstrating CureXcell's safety and efficacy.

Dividend Policy

No dividends are planned.

Intellectual Property

MCUR has four patent families on file covering processes and resulting activated white blood cell compositions that MCUR developed, and their use.

From one of those families MCUR has been granted three patents. One patent in each of the United States and the European Union has claims covering MCUR's process for producing activated white blood cell compositions, and one patent in Australia has claims covering its process of producing activated white blood cell compositions, the compositions themselves, and their use in treating wounds.

MCUR also has two allowed applications and 26 additional pending applications in various jurisdictions, the most important of which separately cover the (i) method for activating white blood cells through hypo-osmotic shock and (ii) the composition of CureXcell.

Competition

Possible competitors include medical practitioners, pharmaceutical and wound care companies, academic and medical institutions, governmental agencies and public and private research institutions, among others.

Any product that MCUR successfully develops and commercializes will compete with existing therapies and new therapies that may become available in the future.

5% stockholders

Pontifax (Israel) and affiliated venture funds 16.0%

Viola Private Equity I, L.P. 15.6%

Kuf Dalet (104) Ltd., Vaizra Ventures Ltd. and affiliated persons 21.1%

Nissim Mashiach 7.4%

David Ben Ami 17%

Ze'ev Bronfeld 24.8%

Tomer Kariv 16.0%

Use of proceeds

MCUR intends to use the $68 million in proceeds from its IPO as follows:

Between $25 million and $35 million for the clinical and regulatory development of CureXcell, which includes between $10 million and $15 million for its ongoing Phase 3 DFU clinical trial and between $15 million and $20 million for its ongoing Phase 3 VLU clinical trial;

between $15 million and $20 million to establish its commercial manufacturing capabilities in the United States; and

the balance, if any, for other general corporate purposes, which may include the development of its platform for regenerative medicine products.

Disclaimer: This MCUR IPO report is based on a reading and analysis of MCUR'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: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.