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Based in Morristown, NJ, Durata Therapeutics (DRTX) scheduled a $75 million IPO with a market capitalization of $192 at a price range mid-point of $12 for Thursday, July 19, 2012.

Five other IPOs scheduled for this week. Full IPO calendar here.

[S-1] filed July 9, 2012.

UNDERWRITERS

Manager, Joint Managers: BofA Merrill Lynch; Credit Suisse

Co Managers: RBC Capital Markets; Wedbush PacGrow Life Sciences

SUMMARY

DRTX is pharmaceutical company focused on the development and commercialization of novel therapeutics for patients with infectious diseases and acute illnesses.

DRTX is owned 98% by venture capital firms pre-IPO.

The core business was acquired from Pfizer (PFE) in 2009.

CONCLUSION

At 2x price-to-book, DRTX wants to IPO at a price-to-book discount to CEMP (3.2 price-to-book) and RIBX (3.8 price-to-book), which was withdrawn.

IPOdesktop is concerned about DRTX's lack of intellectual property protection and would avoid the DRTX IPO.

BUSINESS

DRTX is a pharmaceutical company focused on the development and commercialization of novel therapeutics for patients with infectious diseases and acute illnesses.

DRTX is currently enrolling and dosing patients in two global Phase III clinical trials with the lead product candidate, dalbavancin, for the treatment of patients with acute bacterial skin and skin structure infections, or abSSSI.

Dalbavancin is an intravenous antibiotic product candidate designed for once-weekly dosing, which DRTX believes will facilitate the treatment of patients with abSSSI in both the in-patient and out-patient settings by reducing the length of a patient's hospital stay or avoiding hospital admission altogether and, ultimately, lowering the overall cost of care for these patients.

DRTX is conducting each of these Phase III clinical trials pursuant to special protocol agreements, or SPAs, with the U.S. Food and Drug Administration, or FDA, based on draft guidance issued by the FDA in 2010 for the development of drugs to treat abSSSI.

DRTX also designed these trials based on scientific advice that we received from the European Medicines Agency, or EMA, in December 2010 to meet the regulatory filing requirements in the European Union.

PHASE III

DRTX expects to complete these Phase III clinical trials and have initial, top-line data available in the beginning of 2013.

If DRTX's ongoing Phase III clinical trials are successful, DRTX plans to submit a New Drug Application, or NDA, to the FDA in the first half of 2013 and a marketing authorization application, or MAA, to the EMA in the second half of 2013.

If approved, DRTX intends to directly commercialize dalbavancin in the United States and Western Europe with a targeted hospital sales force and to utilize a variety of types of collaboration arrangements for commercialization in other markets.

ACQUISITION OF VICRON FROM PFIZER

In December 2009, drtx acquired all of the outstanding shares of capital stock of Vicuron from Pfizer. DRTX paid total upfront consideration of $10 million for the Vicuron shares and dalbavancin inventory that DRTX acquired pursuant to a separate inventory transfer agreement with Pfizer Overseas LLC.

In March 2011, Pfizer refunded $6 million of the initial purchase price under the terms of the stock purchase agreement, based on documentation DRTX provided that supported the position that marketing approval for dalbavancin required more than one new Phase III clinical trial.

Following the first commercial sale of dalbavancin for the treatment of abSSSI in the United States, the United Kingdom, Germany, Italy, Spain or France, DRTX is obligated to pay Pfizer an additional milestone payment of $25 million.

However, DRTX's sole discretion, DRTX may elect to defer the milestone payment for a period of up to five years if DRTX delivers to Pfizer a promissory note for the full amount of such milestone payment.

INTELLECTUAL PROPERTY

dalbavancin is protected by four issued U.S. patents consisting of two method-of-treatment patents, a dosage-form patent and a formulation patent, patent protection is not available for composition-of-matter claims that only recite the active pharmaceutical ingredient for dalbavancin.

Because dalbavancin lacks composition-of-matter protection for its active pharmaceutical ingredient, competitors will be able to offer and sell products with the same active pharmaceutical ingredient so long as these competitors do not infringe any other patents covering this drug.

COMPETITION

There are also a number of products in clinical development by third parties to treat abSSSI.

These companies include pharmaceutical companies, biotechnology companies, and specialty pharmaceutical and generic drug companies of various sizes, such as The Medicines Company, Trius Therapeutics (TSRX), Inc., Cempra (CEMP), Rib-X Pharmaceuticals, Inc., Paratek Pharmaceuticals, Inc., Nabriva Therapeutrics AG, Tetraphase Pharmaceuticals, Inc. and Furiex Pharmaceuticals (FURX).

VENTURE CAPITAL

  • 98% owned by Venture Capital, Pre-IPO
  • Domain Associates, 23%
  • New Leaf Ventures II, L.P., 23%
  • Aisling Capital III, LP., 21%
  • Sofinnova Venture Partners VII, L.P., 17%
  • Canaan VIII L.P., 14%

EMPLOYEES

As of June 30, 2012, DRTX had 22 employees. All of employees are engaged in administration, finance, clinical, regulatory and business development functions.

USE OF PROCEEDS

DRTX expects to receive $69 million IPO proceeds.

As of March 31, 2012, DRTX had cash and cash equivalents of $25.3 million. DRTX currently estimates that it will use the net proceeds from this offering, together with cash and cash equivalents, as follows:

  • $13 million to complete the clinical development of and seek marketing approval in the United States and the European Union for dalbavancin for the treatment of patients with abSSSI;
  • $20 million to fund commercial activities for dalbavancin in the United States and Western Europe, if it is approved for the treatment of patients with abSSSI;
  • $15 million to fund the scale up of the manufacturing of dalbavancin in preparation for commercial launch;
  • $10 million to pursue the development of dalbavancin in additional indications; and
  • Remainder for working capital and other general corporate purposes, which may include the in-licensing or acquisition of other products or technologies.
Source: IPO Preview: Durata Therapeutics