Israeli drug release developer PolyPid is set for a Nasdaq IPO next week. The Petah Tikva-based company, which develops delayed release drugs for preventing post-operative infections in cardiac surgery and compound fracture cases, has reported the terms it expects for the offering: it wants to raise $75 million at a company value of $370 million, after money, putting it in the upper tier of Israeli medical companies holding Nasdaq offerings. The underwriters are Goldman Sachs, Cantor Fitzgerald, and Cowen & Co.
The IPO is scheduled for March 23. The amount to be raised is slightly lower than the company intended when it first published its terms for the IPO a month ago. On that occasion, PolyPid reported that it was aiming at raising $86 million at a company value of $300-400 million, after money.
The company's previous investors are expected to spend $20 million on buying shares in the offering. The main shareholders are Morris Kahn's Aurum Ventures (18.3%), Shavit Capital (9.1%), Xenia Venture Capital Ltd. (TASE:XENA) (6.1%), and Eitan Kyiet, Haim Hurvitz (through the CHealth investment company), and Leon Recanati, all of whom have small stakes.
Xenia's share price rose 3.25% today, boosting its market cap to NIS 41.2 million, despite the decrease in the amount to be raised, probably because of the higher probability that the IPO will actually take place.
The US capital market has been hospitable to Israeli medical companies so far this year. Two companies have completed their offerings at sums close to what they were seeking: Sol-Gel Technologies Ltd. (Nasdaq: SLGL) raised $75 million at a company value of $220 million and Motus GI Holdings Inc. (Nasdaq: MOTS) raised $17.5 million at a company value of $77 million, after money. Both companies are currently traded at a slight discount on the share price in their IPOs: 3.5% for Motus GI and 4.5% for Sol-Gel. On the other hand, UroGen Pharma (Nasdaq: URGN), which held its IPO in May 2017, has risen 330% since then, pushing its market cap up to $818 million.
The Nasdaq Biotechnology Index, which usually a good indicator of whether the window of opportunity for offerings by medical companies will remain open, has risen slightly over the past month, following a fall in late January, together with the general market, after a year during which prices mostly rose. Another Israeli company preparing to take advantage of the momentum is Exalenz Bioscience Ltd. (TASE:EXEN), which has a NIS 367 million market cap on the Tel Aviv Stock Exchange (TASE).
In 2014, PolyPid embarked on an IPO, aiming to raise $23 million at a $100 million company value, but had to cancel it because of lack of interest and the market conditions. The company has developed since then, and completed a $22 million financing round in 2016 at an $82 million company value. It changed its marketing focus from post-fracture infections and the dental sector to treatment of post-operative infections.
PolyPid's product is an antibiotic packed in a matrix of polymers (plastic-like molecules) and lipids (fat molecules), from which the company's name is derived. The poly-pid is broken down and releases a specific dosage for a period of time that can continue as long as several months, thereby preventing infection in the affected area (after surgery or a fracture, for example), without taking antibiotics orally or intravenously during that period, and without any need for repeated surgery to replace an implant releasing an antibiotic locally. The fact that the antibiotic is administered continuously in the area of the wound may also improve its effectiveness. The company will try to prove this in its clinical trials.
PolyPid also believes that its product can be used as a platform for local treatment with a variety of drugs, in addition to antibiotics, for example anti-inflammatory drugs or anti-cancer drugs.
Interim results in the company's Phase I/II trials in healing surgical incisions following cardiac surgery show that patients treated with the company's product in addition to the current prevailing treatment had no infections at all, while the control group, which received only the prevailing treatment, experienced a 4.5% rate of infection.
This trial was not supervised by the US Food and Drug Administration (FDA), but in late 2018-early 2019, PolyPid plans to embark on a Phase III trial with the FDA for preventing both infections following cardiac surgery and infections in abdominal operations.
The product is based on an existing antibiotic, and is therefore designated for a short drug development track (505b2), and is also registered for a special track for drugs against infectious diseases - the QIDP track, which expedites the registration process with the FDA.
PolyPid has no revenue. The company lost $54 million in 2017, of which $40 million was financial expenses caused mostly by revaluation of options, compared with an $11.4 million loss in 2016. The company had $18 million in cash as of the end of 2017, after burning $12.3 million in cash during 2017. Its equity deficit is $90 million.
Published by Globes [online], Israel Business News - www.globes-online.com - on March 15, 2018
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