Seeking Alpha
, IPOpremium (656 clicks)
Value, IPOs, long only
Profile| Send Message|
( followers)  

Three medical-related IPOs on tap: Clarus Therapeutics (CLRS), IASO Pharma and Kips Bay Medical (KIPS). In total 13 IPOs are scheduled to raise $3.4 billion for the week of February 7. See the IPO Calendar.

Clarus Therapeutics is planning a $60mm IPO with a market capitalization of $217 million at the price range mid-point of $12, scheduled for Tuesday, February 8, 2011.

CONCLUSION
CLRS is a pharmaceutical company using proceeds to begin stage 3 clinical trials. It's losing money at a high rate relative to the projected market capitalization and seems very speculative at the price range mid-point of $12.

CLRS Valuation Metrics


BUSINESS

CLRS is focused on the development and commercialization of OriTex, a Phase III-ready oral testosterone, or T, replacement therapy. OriTex, if approved, will be a first-in-class T-replacement therapy in the United States as the first oral formulation of a T prodrug, namely, T undecanoate, or TU.

Based on clinical results to date, CLRS believes OriTex may restore circulating T to normal levels and overcome the safety challenges, such as liver toxicity, historically associated with oral T-replacement therapies. CLRS intends to begin dosing men in a pivotal Phase III trial for OriTex after completing this offering.

RISK

The entrance of a generic T-gel to the U.S. T-replacement market would likely create downward pressure on pricing of all T-replacement therapies and thus could affect the pricing of OriTex adversely.

USE OF PROCEEDS of $54mm
$23.0 million of these net proceeds to fund the pivotal Phase III trial for OriTex. $4.0 million to fund preparation and filing of an NDA with the FDA for OriTex upon the successful completion of the pivotal Phase III trial and to satisfy related FDA requirements. $6.0 million of these net proceeds to fund the Phase IV trial of OriTex. To the extent available after NDA submission and not otherwise required for anticipated general corporate purposes, the company may elect to accelerate pre-commercialization activities such as manufacture of commercial inventory and the creation of a sales and marketing infrastructure, and use a portion of the remaining net proceeds to fund these activities. Remainder for general corporate purposes.

IASO Pharma is planning a $20mm IPO with a market capitalization of $34 million at the price range mid-point of $5, scheduled for the week of February 7, 2011

CONCLUSION
Very speculative at the price range mid-point of $5. IASO is a small biopharmaceutical company priced at 3x book value. It's losing a lot of money compared to the projected market capitalization.

IASO Valuation Metrics

BUSINESS

IASO is a biopharmaceutical company that seeks to in-license, develop and commercialize therapeutic products for the treatment and prevention of infectious diseases. The company has obtained exclusive rights to candidates for the treatment of bacterial and fungal infections. To date, IASO has licensed all of the products in its pipeline.

STAGE 2 CLINICAL TRIAL IN PROCESS

IASO’s most advanced product candidate, PB-101 (zabofloxacin), is in a Phase 2 clinical trial in the United States for the treatment of community-acquired pneumonia, or CAP. IASO licensed PB-101 from Dong Wha Pharmaceutical Ind. Co., a Seoul, Korea-based, pharmaceutical company, referred to herein as Dong Wha. IASO initiated the Phase 2 clinical trial in the United States for the CAP indication in March 2010, and, with the proceeds from this offering, plans to complete this study and report top line results by June 30, 2012.

USE OF PROCEEDS of $17.2mm.

$11.8 million for PB-101 development, $800,000 for PB-200a development, $325,000 to repay the IDB Bank line of credit, balance to fund working capital and other general corporate purposes.

Kips Bay Medical plans a $25 million IPO with a market capitalization of $147 million at the price range mid-point of $9, scheduled for Friday February 11, 2011.

CONCLUSION
KIPS is a money losing medical device company working on clinical trials, with no sales. It's very speculative at the price range mid-point of $9.

KIPS Valuation Metrics

BUSINESS
KIPS is a development stage medical device company focused on developing, manufacturing and commercializing external saphenous vein support technology, or eSVS MESH, for use in coronary artery bypass grafting, or CABG, surgery.

KIPS’s eSVS MESH is a mesh sleeve made of nitinol, an alloy of nickel and titanium, that, when placed over a saphenous vein graft during CABG surgery, is designed to improve the structural characteristics and long-term performance of the vein graft.

CLINICAL TRIALS

If the data from KIPS’ clinical trials is not adequate, KIPS may not proceed with the planned filing of applications for regulatory approvals in the United States or other major markets, or may be forced to delay these filings.

INTELLECTUAL PROPERTY

As of December 31, 2010, they had six patent applications pending in the United States and nine patent applications pending in countries outside the United States.

USE OF PROCEEDS of $21 million

$7.0 to 10.0 million to fund the process of seeking regulatory approval to market eSVS MESH in the United States and abroad, including human clinical trials in the United States; $3.0 million to fund the development and testing of additional applications of eSVS MESH; $5.0 million to fund certain milestone payments payable to Medtronic, Inc. for the acquisition of certain intellectual property rights to eSVS MESH. The remainder for working capital and general corporate purposes, including commercialization activities for eSVS MESH in select European and other international markets and for the purchase of capital equipment and expansion of facilities.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 3 Medical IPOS This Week: Clarus Therapeutics, IASO Pharma, Kips Bay Medical