IPO Report: NeuroDerm, Ltd. (NDRM)

Francis Gaskins |

NeuroDerm IPO, NeuroDerm IPO price, NeuroDerm IPO date, IPOs this week, stocks to buy now, small-cap stocksNeuroDerm, Ltd. (NDRM) is a clinical-stage pharmaceutical company developing next-generation treatments for central nervous system, or CNS, disorders through proprietary formulations based on existing drugs that are intended to make a significant difference in patients' lives. It is based in Rehovot, Israel.

Nine other companies are scheduled for the week of Nov. 10, 2014. The full IPO calendar is available at IPOpremium.

SEC Documents

Manager, Joint-managers: Jefferies and Cowen and Company

Co-managers: Oppenheimer and Roth Capital Partners

End of lockup (180 days): Wednesday, April 15, 2015

End of 25-day quiet period: Monday, December 8, 2014

NDRM scheduled a $65 million IPO with a market capitalization of $238 million at a price range midpoint of $14.50 for Thursday, Nov. 13, 2014 on Nasdaq.

NeuroDerm IPO Report

Summary

NDRM is a clinical-stage pharmaceutical company developing next-generation treatments for central nervous system, or CNS, disorders through proprietary formulations based on existing drugs that are intended to make a significant difference in patients' lives.

Product candidates in NDRM’s pipeline are designed to overcome major deficiencies of current treatments and achieve enhanced clinical efficacy through continuous, controlled administration, primarily subcutaneously or transdermally.

Valuation

Glossary

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

annualizing June 6 mos loss

       

NeuroDerm, Ltd. (NDRM)

$238

no rev

-22.0

3.8

3.8

27%

             

Conclusion

Neutral

Shareholders may buy $14 million

No revenue

Products based on reformulations

3.8 times book

P/E of -22, meaning cash drain vs market cap is resonable compared to other pharma IPOs

Business

NDRM is a clinical-stage pharmaceutical company developing next-generation treatments for central nervous system, or CNS, disorders through proprietary formulations based on existing drugs that are intended to make a significant difference in patients' lives.

Product candidates in NDRM’s pipeline are designed to overcome major deficiencies of current treatments and achieve enhanced clinical efficacy through continuous, controlled administration, primarily subcutaneously or transdermally.

Additionally, because NDRM’s product candidates are based on reformulations of leading, approved drugs, NDRM believes that most of them qualify for an accelerated, lower risk regulatory pathway to marketing approval.

For moderate to severe Parkinson's disease, NDRM’s product candidates are aimed at overcoming the most significant limitations of current levodopa-carbidopa, or LD/CD, therapy.

For over 30 years, oral administration of LD/CD has been the standard of care for Parkinson's disease.

However, despite its widespread acceptance, oral LD/CD has significant limitations, primarily short duration in the blood, or half-life, as well as low absorption and availability in the body. As a result, plasma levodopa concentrations fluctuate sharply, contributing to patients' motor complications.

At the advanced stages of the disease, patients do not respond to oral administration of LD/CD, motor complications are exacerbated and patients are left with limited treatment options that are highly invasive and/or burdensome.

NDRM has developed liquid formulations, such as its product candidates ND0612H and ND0612L, that for the first time enable 24-hour, continuous subcutaneous administration of LD/CD to overcome these limitations, maintain steady levodopa levels and offer patients a better quality of life without the need for surgery.

There are three main stages to Parkinson's disease: mild, moderate and severe, each associated with increasing levels of motor complications and requiring different treatments.

NDRM is developing a pipeline of product candidates for the growing population of moderate and severe Parkinson's disease patients that address the deficiencies of current treatments.

These product candidates are designed to administer continuous, controlled doses of LD/CD or apomorphine, utilizing customized versions of off-the-shelf, belt pump devices.

NDRM is also developing a product candidate for patients suffering from cognition disorders associated with CNS diseases.

These diseases include Attention Deficit Disorder/Attention Deficit Hyperactivity Disorder, or ADD/ADHD, Parkinson's disease, Alzheimer's disease and schizophrenia.

NDRM’s cognition product candidate is based on a combination of reformulated approved drugs allowing for continuous administration via transdermal patches.

In its recently completed Phase II trial, NDRM examined plasma levodopa concentrations of individual Parkinson's disease patients treated with optimized, current standard of care and either ND0612L or a placebo as an add-on for 14 days.

Additionally, in order to determine the effect of ND0612L without the standard of care, NDRM conducted an additional week of treatment of ND0612L alone or with entacapone.

An average steady plasma levodopa concentration of 550ng/ml was maintained when ND0612L was administered alone, and an approximately 800ng/ml plasma levodopa concentration was maintained when ND0612L was administered together with twice-daily oral entacapone.

Intellectual property

NDRM’s patents and patent applications underlying its product candidates cover specific compositions and methods of use of the active drug substances for the ND0612H, ND0612L, ND0680 and ND0801 product candidate programs.

For the ND0612H, ND0612L and ND0680 product candidate programs, NDRM has four patents, including patents in the United States, South Africa and New Zealand, and have more than 35 pending patent applications worldwide, including one pending and two national phase international applications filed under the PCT.

Absent patent-term extensions, these patents will expire between 2030 and 2031.

Additional patent applications NDRM has filed in this family, if approved, will expire in 2035. In addition, NDRM has one pending international PCT application for the composition of ND0701.

In relation to the composition and method of use related to ND0801, NDRM has currently been granted four patents, including patents in Australia, Japan, Mexico, and the United States and have more than 10 pending patent applications worldwide pursuant to one national phase international application filed under the PCT. Such patents will expire between 2028 and 2031 absent patent-term extensions.

Competition

Parkinson's Disease

NDRM’s commercial opportunity could be reduced or eliminated if its competitors develop and commercialize products, treatments or procedures that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any product that NDRM may develop.

Specifically, NDRM may compete with companies that attempt to decrease the sharp fluctuations and improve the bioavailability and short-life associated with orally administered LD/CD, such as Impax Laboratories Inc., XenoPort, Inc., Intec Pharma Ltd. and Depomed, Inc., which are developing oral LD/CD drugs that include a controlled release or gastric retention attribute in order to decrease the gastronomical tract's impact on the concentration of levodopa. Similarly, Synagile Corporation is seeking to develop an ester form of levodopa for continuous subcutaneous administration. If such products are approved and successfully improve the bioavailability of LD/CD or an alternative drug, the demand for NDRM’s Parkinson's disease product candidates may be significantly reduced.

Other Cognitive Disorders

Similarly, although NDRM is in the clinical phase of ND0801 for the treatment of other cognitive disorders, such as ADD/ADHD, if ND0801 obtains approval in the future, NDRM would compete with current treatments.

For example, NDRM is aware that a number of existing treatments for ADD/ADHD are currently on the market and are marketed by pharmaceutical companies that may be far larger and more experienced than us. Current competitor drugs to ND0801 for the treatment of ADD/ADHD include stimulants such as Ritalin and Adderall, as well as the non-stimulant drugs Strattera, Intuniv and Kapvay.

Further, NDRM recognizes that patients and doctors are often unwilling to change medications, and this factor may make it difficult for ND0801 to penetrate the market, even if it receives FDA approval.

However, based on its clinical trials, NDRM believes that ND0801 will have a sustainable competitive advantage over the current alternatives, and at the very least offer an alternative mode of administration.

5% shareholders pre-IPO

Capital Point Ltd.    17%

Shmuel Cabilly  22.4%

Robert Taub       28.2%

Uwe Wascher   26.1%

Dividends

No dividends are planned.

Use of proceeds

NDRM expects to receive $58 million from its IPO and use it for the following:

$20 million with respect to its ND0612H product candidate through completion of phase III clinical trials in 2017 and receipt of marketing approval which, depending on the results of its clinical trials and the regulatory approval process, NDRM expects to receive in Europe by the first half of 2018 and in the United States by the second half of 2018;

$20 million with respect to its ND0612L product candidate through the commencement of its two pivotal phase III clinical trials in 2015 in the United States and Europe to support an NDA submission to the FDA (but not to fund the completion of such clinical trials or receipt of marketing approval);

and $5 million to advance the development of its other product candidates and general research activities.

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
NDRM NeuroDerm Ltd. 15.55 0.00 0.00 59,625

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