IPO Report: Parnell Pharmaceuticals Holdings (PARN)

Francis Gaskins |

Parnell Pharmaceuticals Holdings ($PARN) is a fully integrated pharmaceutical company focused on developing, manufacturing and commercializing innovative animal health solutions headquartered in Alexandria, Australia.

Eleven other companies are scheduled for the week of June 16, 2014. The complete IPO calendar is available at IPOpremium.

The manager and joint managers are Jefferies and Piper Jaffray. The co-managers are JMP Securities, Ladenburg Thalmann, and Geller Biopharm.

PARN scheduled a $65 million IPO with a market capitalization of $207 million at a price range midpoint of $18 for Wednesday, June 18, 2014 on the Nasdaq.  SEC Filings

Parnell Pharmaceuticals Holdings IPO Report

Overview

PARN is a fully integrated pharmaceutical company focused on developing, manufacturing and commercializing innovative animal health solutions.

PARN currently markets five products for companion animals and production animals in 14 countries and augment its pharmaceutical products with its proprietary iKAM and mySYNCH® software platforms.

PARN’s primary competitors currently include Zoetis, Merck, Merial and Bayer in dairy; and Zoetis, Merck, Merial, Novartis, Boehringer Ingelheim GmbH, and Ceva in companion animal products..

 

Valuation

Glossary

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

annualizing March 9 mos

       

Parnell Pharmaceuticals Holdings (PARN)

$207

36.1

-22.2

4.0

5.4

31%

             

Conclusion

The rating on PARN is neutral minus.

Business

PARN is a fully integrated pharmaceutical company focused on developing, manufacturing and commercializing innovative animal health solutions.

Five products, 14 countries

PARN currently markets five products for companion animals and production animals in 14 countries and augment its pharmaceutical products with its proprietary iKAM and mySYNCH® software platforms.

PARN’s lead reproductive hormone products, estroPLAN® and GONAbreed®, are designed to safely and effectively improve cattle breeding performance and are currently marketed in 12 countries.

PARN was the first company to achieve FDA approval for the indication of estrous synchronization in lactating dairy and beef cows.

Strategy

These innovative technology solutions are designed to enhance the quality of life or performance of animals, while driving PARN’s customers’ operational efficiency and profitability.

PARN believes its value-added solutions help establish it as a business partner with its customers rather than only as a commodity provider, differentiating it from its competitors.

In the last decade, PARN has significantly enhanced its core competencies across the entire pharmaceutical value chain.

Clinical trials and regulatory development

A key strength of PARN’s business is its clinical trial and regulatory development experience. PARN has conducted over 31 clinical trials across six countries in 70 trial sites during the last ten years.

PARN’s products have been approved by regulators in the United States, Europe, Canada, Australia, New Zealand and multiple other jurisdictions throughout Latin America, Asia, the Middle East and Africa.

PARN is planning to conduct at least 25 additional clinical trials over the next four years. PARN has constructed a U.S. Food and Drug Administration, or FDA, inspected, sterile manufacturing facility located in Sydney, Australia, which PARN believes provides it with a low-cost and reliable supply of its products.

PARN currently has 75% available capacity above its current manufacturing demand, creating significant contract manufacturing and pipeline expansion opportunities.

Seven new products over next five years

PARN intends to leverage these core competencies to bring at least seven new products to market over the next five years, addressing up to 12 indications, with a particular focus on the companion animal sector.

PARN also expects to actively expand its pipeline through targeted development and in-licensing opportunities.

PARN markets its reproductive hormone products in conjunction with its proprietary software platform, mySYNCHTM, in order to deliver superior breeding outcomes.

Gaining market share in the US

Since launching in the U.S. in mid-2013, PARN has steadily acquired market share and PARN estimates that it typically enjoys a top three market share position in many other countries where PARN has been selling its products for many years.

Dividend Policy

No dividends are planned.

Competition

PARN’s primary competitors currently include Zoetis, Merck, Merial and Bayer in dairy; and Zoetis, Merck, Merial, Novartis, Boehringer Ingelheim GmbH, and Ceva in companion animal products.

In the future, PARN may compete against other companies such as Vetoquinol, Virbac, and Dechra which are larger European companies, and other emerging growth companies such as Aratana, Kindred Biosciences and NexVet.

5% stockholders

Robert T. Joseph 11.6%

Pinehill Pty Ltd  62.8%

Robert T. Joseph          11.6%

McCarthy B&J Pty Ltd     6.7%

Use of proceeds

PARN expects to net $52 million from its IPO. Proceeds are allocated as follows:

$25 million to repay then-outstanding principal amount, and $1.7 million in then-outstanding interest amounts under its credit facility with SWK Funding LLC, dated as of January 23, 2014, which matures on January 23, 2021. The SWK credit facility carries an effective interest rate of 17%. PARN used proceeds from the facilities to repay outstanding amounts under a prior credit facility and to fund its operations.

$10 million to $20 million for the further development of its product candidates and $10 million for expansion of its commercial infrastructure in anticipation of future product launches and for other general corporate and working capital purposes.

PARN may also use a portion of its net proceeds to in-license or acquire additional product candidates, technologies or businesses; however, PARN currently has no agreements or commitments to complete any such transaction.

 

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
PARN Parnell Pharmaceuticals Holdings Ltd 1.31 0.02 1.55 37,470
KLEG Kl Energy Corp New 0.02 0.00 0.00 0

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