IPO Report: Edge Therapeutics (EDGE)

Francis Gaskins |

Edge Therapeutics (EDGE) is a clinical-stage biotechnology company that discovers, develops and seeks to commercialize novel, hospital-based therapies capable of transforming treatment paradigms in the management of acute, life-threatening conditions. The company is based in Berkeley Heights, NJ.

Five other companies are scheduled for the week of Sept. 28. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: Leerink Partners, Credit Suisse
Co-managers: Guggenheim Securities, JMP Securities

End of lockup (180 days): Tuesday, March 29, 2016
End of 10-day quiet period: Sunday, October 11, 2015

Analyst report estimate:  neutral

EDGE scheduled an $85 million IPO with a market capitalization of $388 million at a price range midpoint of $15 for Thursday Oct. 1, 2015 on Nasdaq.  Priced at $11

EDGE IPO Summary

EDGE is a clinical-stage biotechnology company that discovers, develops and seeks to commercialize novel, hospital-based therapies capable of transforming treatment paradigms in the management of acute, life-threatening conditions.

EDGE’s initial product candidates target rare, acute, life-threatening neurological conditions for which EDGE believes the approved existing therapies are inadequate.

EDGE IPO Valuation

Glossary
Pre-IPO grade-score summary
http://gaskinsco.com/scr-rate.htm
Many IPOs in today’s environment are graded C+ and scored 7.
If the pre-IPO grade is below C+ or the score is below 7,
then our analysts may have some concerns about the company’s
outlook and/or its market segment.
If the pre-ipo grade is above C+ or the score is above 7,
then our analysts believe the company’s overall business outlook is very favorable.
C = unprofitable, C+ = profitable

Accumulated deficit (mm)

.

.

-$42

     

Per share dilution

.

.

-$10.03

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Edge Therapeutics *EDGE)

$387

n/a

-35.2

3.0

3.0

22%

             

EDGE IPO Conclusion

Neutral, C, 6

Stockholders may purchase $30 mm, 35%

Orphan Drug Designation for EG-1962, May '15

Sustained drug exposure over 21 days to the brain

Phase 3 clinical trial planned for mid-2016

Price to book of 3

P/E of -35 indicating moderate cash burn rate relative to market cap

EDGE Business

EDGE is a clinical-stage biotechnology company that discovers, develops and seeks to commercialize novel, hospital-based therapies capable of transforming treatment paradigms in the management of acute, life-threatening conditions.

EDGE’s initial product candidates target rare, acute, life-threatening neurological conditions for which EDGE believes the approved existing therapies are inadequate.

Lead product
EDGE believes EG-1962, its lead product candidate, can fundamentally improve patient outcomes and transform the management of aneurysmal subarachnoid hemorrhage, or aSAH, which is bleeding around the brain due to a ruptured brain aneurysm.

A single dose of EG-1962 is designed to deliver high concentrations of nimodipine, the current standard of care, directly to the brain with sustained drug exposure over 21 days.

EG-1962 utilizes EDGE’s proprietary, programmable, biodegradable polymer-based development platform, or its Precisa® development platform, a novel delivery mechanism that enables targeted and sustained drug exposure while potentially avoiding the dose-limiting side effects associated with currently available formulations of nimodipine.

Orphan Drug Designation for EG-1962
On May 28, 2015, the U.S. Food and Drug Administration, or the FDA, granted EDGE orphan drug designation for EG-1962 for the treatment of patients with aSAH and on September 3, 2015 the European Union (EU) Committee on Orphan Medicinal Products (COMP) issued a positive opinion for orphan drug designation of EG-1962 for treatment of aneurysmal subarachnoid hemorrhage.

Phase 1/2 clinical trial, the NEWTON trial
In April 2015, enrollment was completed in EDGE’s Phase 1/2 clinical trial of EG-1962 in North America, which EDGE refers to as its NEWTON trial.

The NEWTON trial met its primary and secondary endpoints of safety, tolerability, defining the maximum tolerated dose (MTD) and pharmacokinetics.

The results of the principal exploratory endpoint from the 90-day follow-up available for patients in the NEWTON trial demonstrated that 60% (27 of 45) of patients treated with EG-1962 experienced a favorable clinical outcome (a score of 6-8 on the extended Glasgow Outcome Scale, or GOSE) versus only 28% (5 of 18) of patients treated with the standard of care, oral nimodipine.

Of the 45 patients treated with EG-1962, 90 days following treatment 27% (12 of 45) of patients across 17 sites achieved the highest clinical outcome score (GOSE=8, Upper Good Recovery) versus only 6% (1 of 18) patients treated with the standard of care oral nimodipine.

Planned Phase 3 clinical trial mid-2016
Based on End-of-Phase 2 correspondence from the FDA received in late July 2015, EDGE has determined the design and key elements of its planned Phase 3 clinical program for EG-1962 for the treatment of aSAH.

Subject to submission and review by the FDA of a final protocol for the planned Phase 3 clinical trial, EDGE expects to initiate the Phase 3 trial in mid-2016.

Based on the results of the NEWTON trial, for a condition for which there is a substantial unmet medical need for better treatments, and the use of the FDA’s Section 505(b)(2) regulatory pathway, EDGE believes this Phase 3 clinical trial, if successful, could form the basis of an NDA submission to the FDA for EG-1962.

Intellectual property

EG-1962 (Precisa development platform containing nimodipine)

EDGE has used its Precisa development platform, in collaboration with Evonik, to develop pharmaceutical compositions that contain particular polymorphic forms of nimodipine.

Based on the collaboration, EDGE co-owns together with Evonik one issued U.S. patent claiming a process for producing microparticles encapsulating a particular polymorphic form of nimodipine, a semisolid delivery system containing microparticles comprising the particular polymorphic form of nimodipine, and to a method of treating a cerebral artery in a subarachnoid space at risk of interruption due to a brain injury using such a delivery system.

EG-1964 (Precisa development platform containing aprotinin) and Other Product Candidates

With respect to both EG-1964 and its other development efforts, EDGE has one issued U.S. patent (scheduled to expire in 2028 if all maintenance fees are paid) directed to a method of treating hematoma expansion or recurrent bleeding resulting from a hemorrhagic condition (e.g., a chronic subdural hematoma) by administering a pharmaceutical composition comprising an anti-fibrinolytic agent (e.g., aprotinin).

EDGE also has a pending patent application in the United States where EDGE is pursuing claims to a pharmaceutical composition containing an anti-fibrinolytic agent.

EDGE is also seeking patent protection in numerous countries and regions including, among others, Australia (patent granted), Brazil, Canada, China, Europe, Israel, Japan, Korea, Singapore, New Zealand and Russia.

EDGE Competition

There is limited competition or product candidates under development to improve patient outcomes after aSAH in the current marketplace.

In the United States, only oral forms (gel caps or solution) of nimodipine are available.

In May 2013, Nymalize from Arbor Pharmaceuticals, LLC was approved by the FDA. EDGE does not view this as a competitive product and anticipate usage only in patients who are unable to swallow oral gel caps.

In the United States, sodium nitrite has been tested by Hope Pharmaceuticals, Inc. in a Phase 1/2 trial in 18 patients, but EDGE believes it has the same systemic side effects of other vasodilators.

In Europe, only intravenous and oral forms of nimodipine are available. In Japan and some parts of Asia, fasudil (Eril) and ozagrel (a thromboxane synthetase inhibitor) are available.

In Japan, nicardipine implanted pellets were used at one institution. The pellets were compounded in the pharmacy, as there are no commercial manufacturing capabilities available to EDGE’s knowledge.

Further, the pellets must be implanted into the brain during a surgical operation, which now represents approximately 35% of all procedures to repair aneurysms at most academic centers.

EDGE is aware that BDS Pharma, GmbH has obtained patent protection in the United States for nicardipine PLGA-pellets (Rods) for cisternal delivery but EDGE is unaware of any clinical trials that have been initiated using such nicardipine PLGA-pellets.

5% shareholders pre-IPO

Sofinnova Venture Partners IX, L.P. 9.2%

Entities affiliated with Venrock  8.0%

Janus Global Life Sciences Fund 8.0%

Entities affiliated with New Leaf Ventures III, L.P. or New Leaf 6.4%

Franklin Advisers, Inc.  6.4%

Sol Barer, Ph.D.  5.3%

Kurt Conti  5.9%

James I. Healy, M.D., Ph.D. 9.2%

Anders D. Hove, M.D. 8.0%

Dividends

No dividends are planned.

Use of proceeds

EDGE expects to receive $76 million from its IPO and use it for the following:

$50 million to fund its planned Phase 3 clinical program (including costs associated with the NEWTON trial and manufacturing scale-up) for EG-1962 for the management of aSAH through read out of top-line data;

$3 million to fund its development work on other routes of administration and other uses of EG-1962;

$12 million to fund its preclinical studies and the commencement of clinical trials of EG-1964 for the prevention of recurrent bleeding after cSDH;

$3 million to fund new and ongoing discovery and development programs; and

the remainder for working capital and general corporate purposes, including funding certain development and regulatory milestone payments related to EG-1962.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
EDGE Edge Therapeutics Inc. 11.81 0.08 0.68 55,106

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