IPO Report: Ritter Pharmaceuticals (RTTR)

Francis Gaskins |

Ritter Pharmaceuticals (RTTR) develops novel therapeutic products that modulate the human gut microbiome to treat gastrointestinal diseases. The company is based in Los Angeles, CA.

Six other companies are scheduled for the week of June 15. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: Aegis Capital Corp, Chardan Capital Markets
Co-managers: Barrington Research

End of lockup (180 days): Tuesday, December 15, 2015
End of 25-day quiet period: Monday, July 13, 2015

RTTR scheduled a $20 million IPO with a market capitalization of $62 million at a price range midpoint of $11 for Thursday, June 18, 2015 on Nasdaq.

Summary

RTTR develops novel therapeutic products that modulate the human gut microbiome to treat gastrointestinal diseases.

RTTR is advancing human gut health research by exploring the metabolic capacity of the gut microbiota and translating the functionality of prebiotic-based therapeutics into applications intended to have a meaningful impact on a patient’s health.

Valuation

Glossary

Accumulated deficit (mm)

.

.

-$19

     

Per share dilution

.

.

-$7.69

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Ritter Pharmaceuticals (RTTR)

$62

no rev

-11.0

3.3

3.3

32%

Q1 annualized

         
             

Conclusion

Neutral

Shareholders may purchase $5mm on the IPO

No collaborations

May start phase 2b trials wth IPO procedss

3.3 times book

-11 P/E indicating moderate cash burn relative to market cap

Business

RTTR develops novel therapeutic products that modulate the human gut microbiome to treat gastrointestinal diseases.

RTTR is advancing human gut health research by exploring the metabolic capacity of the gut microbiota and translating the functionality of prebiotic-based therapeutics into applications intended to have a meaningful impact on a patient’s health.

RTTR’s first novel microbiome modulator, RP-G28, an orally administered, high purity galacto-oligosaccharide, is currently under development for the reduction of symptoms associated with lactose intolerance. RP-G28 is designed to stimulate the growth of lactose-metabolizing bacteria in the colon, thereby effectively adapting the gut microbiome to assist in digesting the lactose that reaches the large intestine. RP-G28 has the potential to become the first FDA-approved drug for the reduction of symptoms associated with lactose intolerance. RP-G28 has been studied in a Phase 2a clinical trial and is a first-in-class compound.

Intellectual Property

RTTR has sought patent protection in the United States and internationally for uses of RP-G28 and its discovery programs, and any other inventions to which RTTR has rights, where available and when appropriate. RTTR’s policy is to pursue, maintain and defend patent rights, whether developed internally or licensed from third parties, and to protect the technology, inventions and improvements that are commercially important to the development of its business.

RTTR also relies on trade secrets that may be important to the development of its business. RTTR does not have composition of matter patent protection for RP-G28, which may result in competitors being able to offer and sell products so long as these competitors do not infringe any other patents that RTTR holds, or that third parties hold, including patents in Europe to which RTTR has an exclusive option of assignment, which are directed to methods of manufacturing and purified RP-G28, and U.S. patents that RTTR owns, that are directed to methods of using RP-G28.

Competition

Although RTTR knows of no other drug candidate in advanced clinical trials for treating lactose intolerance, other biopharmaceutical companies may be able to develop other compounds or drugs that are able to achieve similar or better results.

RTTR’s potential competitors include major multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies and universities and other research institutions.

Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. RTTR believes the key competitive factors that will affect the development and commercial success of its product candidates are efficacy, safety and tolerability profile, reliability, convenience of dosing, price and reimbursement.

5% Shareholders Pre-IPO

Javelin Venture Partners I SPV I, LLC     17%      ​            ​

Javelin Venture Partners, L.P.    35.1%   ​            ​

Stonehenge Partners LLC ​         21.6%   ​            ​

Michael D. Step            ​            16.3%  

Dividends

No dividends are planned.

Use of Proceeds

RTTR expects to receive $17 million from its IPO and use it for the following:

$9.4 million to fund the continued clinical development of RP-G28 for the reduction of symptoms associated with lactose intolerance, including its anticipated Phase 2b/3 trial and non-clinical development;

​$2.5 million to fund expenses associated with the manufacture and product development of RP-G28;

​$0.5 million to explore potential orphan indications; and

​$5.0 million for general corporate purposes, general and administrative expenses, capital expenditures, working capital and prosecution and maintenance of its intellectual property.

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
RTTR Ritter Pharmaceuticals Inc. 2.56 0.07 2.81 129,934

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