IPO Report: Bio Blast Pharma Ltd. (ORPN)

Based in Tel Aviv, Israel, Bio Blast Pharma Ltd. (ORPN) is a development-stage biopharmaceutical company focused on the identification, licensing, acquisition, development and commercialization of drugs for rare and ultra-rare genetic and metabolic diseases.

Nineteen other companies are scheduled for the week of July 28, 2014.  The full IPO calendar is available at IPOpremium.

The manager and co-managers are Oppenheimer/ Roth Capital Partners.  The joint managers is BTIG.

ORPN scheduled a $40 million IPO on the Nasdaq with a market capitalization of $172 million at a price range midpoint of $172 for Friday, Aug. 1, 2014. SEC filings

Overview

ORPN is a development-stage biopharmaceutical company focused on the identification, licensing, acquisition, development and commercialization of drugs for rare and ultra-rare genetic and metabolic diseases.

Valuation

Glossary

Conclusion

The rating is neutral.

25% of the IPO is spoken for.

Price-to-book is 4.1.

Low cash burn rate (P/E ratio of -144).

Business

ORPN is a development-stage biopharmaceutical company focused on the identification, licensing, acquisition, development and commercialization of drugs for rare and ultra-rare genetic and metabolic diseases.

ORPN seeks to identify therapeutic platforms that offer solutions for several diseases that share a common pathophysiological mechanism, which are the functional changes that accompany a particular syndrome or disease. ORPN focuses on diseases with severe and debilitating manifestations, where the unmet medical need is clear, the biological mechanism of action is understood and for which there is no satisfactory treatment.

Since its inception in 2012, ORPN has developed and in-licensed potential treatments for six diseases, one of which in a Phase 2/3 clinical trial which, if the results are positive, ORPN believes could be a pivotal trial, another one which is in Phase 2 clinical study and an additional two of which ORPN expects will be in mid/late stage clinical studies by late 2014 or early 2015. ORPN has not yet submitted any investigational new drug applications for its products to the FDA.

ORPN’s current drug candidate pipeline has been either in-licensed from academic institutions or developed internally.

ORPN’s strategy is based on risk diversification through multiple therapeutic platforms, diversified clinical and pre-clinical stages of its programs, and diversified diseases addressed.

ORPN uses strict selection criteria of its pipeline platforms and cost-efficient drug development. This allows ORPN to pursue multiple programs in parallel with the goal of promptly delivering safe and effective therapies to patients in dire need.

Dividend Policy

No dividends are planned.

Intellectual Property

ORPN seeks patent protection in the United States and internationally for its product candidates and other technology.

ORPN’s policy is to patent or in-license the technology, inventions and improvements that ORPN considers important to the development of its business.

In addition to patent protection, ORPN intends to use other means to protect its proprietary rights, including pursuing marketing or data exclusivity periods, orphan drug status, and similar rights that are available under regulatory provisions in certain countries, including the United States, Europe, Japan, and China.

Competition

The commercialization of new drugs is competitive, and ORPN may face worldwide competition from individual investigators, major pharmaceutical companies, specialty pharmaceutical companies, biotechnology companies, nutraceutical companies, and ultimately biosimilar and generic companies.

The acquisition or licensing of pharmaceutical products is also very competitive, and a number of more established companies, which have acknowledged strategies to license or acquire products, may have competitive advantages as may other emerging companies taking similar or different approaches to product acquisitions.

These established companies may have a competitive advantage over ORPN due to their size, cash flows, and institutional experience.

5% Stockholders

Udi Gilboa                                 29.8%                                        

Dr. Dalia Megiddo                      29.8%                                        

Pontifax                                    20.2%                                                             

Use of Proceeds

ORPN intends to use the $36 million in proceeds from its IPO as follows:

– Completing its clinical program for OPMD, estimated at $6,000,000;

– Completing its Phase 2 and pivotal clinical study for SCA3, estimated at $3,500,000;

– Initiating and completing its Phase 2/3 clinical study for SBMA, estimated at $4,200,000;

– Completing its pre-clinical program for BB-FA and Phase 1 clinical study, estimated at $4,500,000;

– Completing its pre-clinical program for BB-OTC and initiation and completion of Phase 1 and 2A-2B clinical studies, estimated at $7,800,000;

– Initiating and completing its Phase 1-2 clinical programs for SMA, estimated at $2,200,000;

– Other Indications, estimated at $500,000;

– Premarketing activity for OPMD, estimated at $1,500,000; and

– The remainder for personnel-related costs, preclinical research, working capital, and other general corporate purposes.