IPO Report: Egalet (EGLT)

Francis Gaskins |

Egalet (EGLT)’s lead product candidate, Egalet-001, is an abuse-deterrent, extended-release, oral morphine formulation in development for the treatment of moderate to severe pain.

13 other companies are scheduled to IPO this week.  The full IPO calendar is available at IPOpremium.com

EGLT scheduled a $42 million IPO with a market capitalization of $167 million at a price range midpoint of $12 for Thursday, February 6, 2014, on the Nasdaq

Manager, Joint managers: Stifel, JMP Securities

Co-Managers: Canaccord Genuity, Janney Montgomery Scott
SEC Documents

Overview
EGLT expects to initiate the first of two Phase 3 safety and efficacy trials for Egalet-002 in the fourth quarter of 2014 and to submit an NDA to the FDA in the first half of 2016.

Valuation

Glossary

Cash burn rate:  when a company loses money with minimal depreciation & amortization (think biopharmas), the negative Price/Loss ratio is an indication of cash burn rate.  The higher the loss the lower the absolute (negative) ratio.  The lower the loss the higher the absolute (negative) ratio.

 

 

 

 

 

 

 

Valuation Ratios

Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing Sept 9 mos

Cap (mm)

Sls

Erngs

BkVlue

TanBV

in IPO

Egalet (EGLT)

$167

n/a

-11.4

2.7

2.7

25%

Conclusion

Buy, Phase 3 Q4 '14, low price/book, shareholders indicate buying, burn rate ok.

Business
Using its proprietary technology platform, EGLT has developed a pipeline of clinical-stage, opioid-based product candidates in tablet form that are specifically designed to deter abuse by physical and chemical manipulation while also providing the ability to tailor the release of the API.

Product candidates
EGLT’s lead product candidate, Egalet-001, is an abuse-deterrent, extended-release, oral morphine formulation in development for the treatment of moderate to severe pain.

There are currently no commercially available abuse-deterrent formulations of morphine, and EGLT believes that Egalet-001, if approved, would fill a significant unmet need in the marketplace.

EGLT has completed its Phase 1 clinical trials of Egalet-001 and EGLT expects to initiate pivotal trials to establish bioequivalence of Egalet-001 to MS-Contin, a currently approved oral morphine formulation, in the first quarter of 2014 and to submit an NDA, to the FDA in the fourth quarter of 2014.

EGLT’s second product candidate, Egalet-002, is an abuse-deterrent, extended-release, oral oxycodone formulation in development for the treatment of moderate to severe pain.

EGLT  believes that Egalet-002, if approved, will have advantages over other currently commercially available, long-acting, abuse-deterrent oxycodone products due to its differentiated abuse-deterrent properties and a PK profile that exhibits low peak-to-trough concentration variability in drug exposure.

Clinical trials
EGLT has conducted Phase 1 trials of Egalet-002 and has completed initial abuse deterrence studies in compliance with the FDA draft guidance.

EGLT expects to initiate the first of two Phase 3 safety and efficacy trials for Egalet-002 in the fourth quarter of 2014 and to submit an NDA to the FDA in the first half of 2016.

History

EGLT US is a Delaware corporation formed in August 2013 and prior to this offering had no operations.

On November 26, 2013, EGLT US acquired all of the outstanding shares of Egalet UK. As a result, Egalet UK became a wholly owned subsidiary of EGLT US, and the former shareholders of Egalet UK now hold shares of EGLT US.

EGLT is a specialty pharmaceutical company developing and planning to commercialize proprietary, abuse-deterrent oral products for the treatment of pain and in other indications.

Intellectual property

As of December 31, 2013, EGLT owned five issued patents or allowed patent applications within the United States, and an additional 50 issued foreign patents covering its product candidates or technology platform. The terms of the five issued U.S. patents or allowed U.S. patent applications, extend to various dates between 2022 and 2030.

Competition

If approved, Egalet-001 would compete against branded and generic, long-acting morphine products labeled for the treatment of moderate to severe pain.

These existing products include Pfizer's Avinza, Actavis' Kadian, Purdue's MS-Contin, and generic morphine products produced by Actavis, Mallinckrodt, Rhoades Pharmaceuticals, Mylan and Endo.

If approved, Egalet-002 would compete directly against Purdue's OxyContin OP for the treatment of patients experiencing moderate to severe pain.

Although no generic oxycodone products are currently commercially available, it is possible that a generic formulation with abuse-deterrent features could be developed to mirror OxyContin OP, in which case Egalet-002 would compete with any such generic oxycodone products.

5% stockholders

Atlas Venture Fund VII, L.P.  30.1%

Danish Biotech SPV I P/S  22.7%

Sunstone Life Science Ventures Fund II K/S 19.7%

Egalet A/S   19.5%

Index Entities 17.1%

Enso Ventures 2 Limited 6.2%

Use of proceeds

EGLT expects to net $36.7 million from its IPO. Proceeds are allocated as follows:

$8 million to fund pivotal bioequivalence trials and abuse deterrence studies for Egalet-001;

$19 million to fund Phase 3 efficacy and safety trials, as well as alcohol interaction studies and abuse deterrence studies for Egalet-002;

$9 million to establish commercial manufacturing capability for Egalet-001 and Egalet-002;

$10 million to fund EGLT’s other research and development operations; and

the remainder for working capital and general corporate purposes.

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
EGLT Egalet Corporation 8.63 0.33 3.98 512,073
FNON Mabwe Minerals Inc 0.01 0.00 0.00 0

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