IPO Report: Forward Pharma A/S (FWP)

Forward Pharma A/S ($FWP) is initiating a Phase 3 clinical trial for multiple sclerosis. It is based in Copenhagen, Denmark,

Six other companies are scheduled for the week of Oct. 13, 2014.  The full IPO calendar is available at IPOpremium.

The manager and co-managers are Leerink Partners, Jefferies & Co., and RBC Capital Markets.

The joint managers is JMP Securities.

FWP scheduled a $200 million IPO with a market capitalization of $941 million at a price range midpoint of $21 for Wednesday, October 15, 2014 on the Nasdaq.  SEC filings

Forward Pharma IPO Report

Overview

FWP is initiating a Phase 3 clinical trial for multiple sclerosis.

FWP believes that its key competitor in the DMF space is Biogen.  Biogen's Tecfidera® was approved by the FDA for the treatment of RRMS on March 27, 2103.

Tecfidera® generated global sales of $2.08 billion from launch in April 2013 through June 30, 2014.

Valuation

Glossary

Conclusion

Neutral plus

Initiating Phase 3 trial for multiple sclerosis

Competitor had $2bb in rev 15 months after launch

4.7 times book

Low cash burn rate relative to market cap

Stockholders not purchasing

Business

Initiating Phase 3 clinical trial for multiple sclerosis

FWP is a Danish biopharmaceutical company preparing to initiate a Phase 3 clinical trial using FP187, a proprietary formulation of dimethyl fumarate, or DMF, for the treatment of multiple sclerosis, or MS, patients.

Proprietary formulation of dimethyl fumarate, or DMF

Since its founding in 2005, FWP has worked to advance unique formulations of DMF, an immune modulator, as a therapeutic to improve the health and well-being of patients with immune disorders including MS.

FP187, FWP’s clinical candidate, is a DMF formulation in a delayed and slow release oral dose, which FWP plans to advance for the treatment of relapsing remitting MS, or RRMS, and other immune disorders, such as psoriasis.

Oral drugs employing DMF as an active pharmaceutical ingredient, or API, have been in use for over half a century.

DMF is also an API found in Fumaderm®, which has been sold for the treatment of psoriasis since 1994 in Germany.

Tecfidera®, from Biogen Idec Inc

Today, DMF is the API found in Tecfidera®, which Biogen Idec Inc., or Biogen, began selling for the treatment of RRMS following approval by the U.S. Food and Drug Administration, or FDA, in March 2013 (and approval by the European Commission, or EC, in February 2014).

Tecfidera®, which is an oral dose of 480 mg of DMF daily (240 mg twice daily), generated global sales from launch in April 2013 through June 30, 2014 of $2.08 billion.

Aditech specifically focused on the development of an innovative delayed and slow release formulation of DMF, with the goal of limiting side effects typically associated with DMF treatment.

History

In 2004, a private Swedish company Aditech Pharma AB (collectively with its successor-in-interest, a Swiss company Aditech Pharma AG, or Aditech), controlled by Nordic Biotech General Partner ApS (an affiliate of one of FWP’s largest shareholders), assessed the potential for DMF to become a significant global product.

FWP was founded in 2005 for the purpose of exploiting a patent family Aditech filed relating to, among other things, its delayed and slow release formulation for DMF, and in 2010 FWP acquired this patent family from Aditech.

Under its agreements with Aditech, FWP obtained, among other things, Aditech's patents and associated know-how related to DMF formulations.

Dividend Policy

No dividends are planned.

Intellectual Property

FWP divides its intellectual property portfolios primarily into two basic patent families, which FWP refers to as its "Core Composition Patent" family and its "Erosion Matrix Patent" family.

FWP’s Core Composition Patent family, based on international application PCT/DK2005/000648, filed by Aditech in 2005, discloses, FWP believes, among other things, a broad range of controlled release pharmaceutical compositions of DMF, including the use of a dose of about 480 mg of DMF per day to treat MS.

FWP’s Erosion Matrix Patent family, based on international application PCT/EP2010/050172, filed in 2010, covers its delayed and slow release formulations of DMF in FP187, as used in the set of Phase 1 clinical trials and Phase 2 clinical trial mentioned above.

Competition

FWP believes that its key competitor in the DMF space is Biogen.

Biogen's Tecfidera® was approved by the FDA for the treatment of RRMS on March 27, 2103.

Tecfidera® generated global sales of $2.08 billion from launch in April 2013 through June 30, 2014.

Other companies have also developed alternative therapeutic approaches for the treatment of RRMS.

These include Novartis AG whose Gilenya® is a once daily oral dose drug to treat RRMS approved in September 2010, and Genzyme Corporation (a subsidiary of Sanofi S.A.), which developed Aubagio®, a RRMS drug approved in September 2012.

FWP also faces competition from potential new entrants into the RRMS market.

For example, Receptos Inc. has a product candidate, RPC1063, in Phase 2/3 testing which, if successfully approved and launched would be a once daily oral treatment for RRMS.

5% stockholders

BML Healthcare I, L.P.   28.26%

Nordic Biotech K/S        39.00%

Nordic Biotech Opportunity Fund K/S     32.31%                                  

Florian Schönharting   71.29%

Use of proceeds

FWP intends to use the $181 million in proceeds from its IPO as follows along with cash on hand:

$80 million for the clinical development of FP187 for the treatment of RRMS;

$25 million to fund the exploitation and protection of its intellectual property rights (including in connection with oppositions and interference cases);

$22 million for the clinical development of FP187 for the treatment of psoriasis;

$12 million for execution of its pre-clinical program, for its manufacturing activities, and for related Phase 1 clinical trials; and

the remainder for working capital and other general corporate purpose