UroGen Pharma makes strong entry into the US market
UroGen Pharma is an Israel-based biopharmaceutical company developing products to combat urothelial and urological cancer. The company currently has two products in development but none in the consumer market.
Conventional cancer treatments fall into three categories. They are either chemotherapies, radiation therapies or surgeries. UroGen Pharma seeks to eliminate the need for surgery in cancer treatment. By using compounds based on Mitomyn C, a supplemental drug for post-surgery cancer treatment, UroGen Pharma hopes to develop drugs that can eradicate tumors on their own. At the moment the company has made considerable progress in two of its primary products, the VesiGel and the MitoGel.
UroGen Pharma was founded in 2004, but it is still in its clinical trial stage. The company has had a hard time cracking the market because of the strict regulations and trials that its drugs have to undergo before they can be mass-produced. The Israel-based firm opened itself up to trading on the US NASDAQ market on Thursday. It traded under the stock label URGN. UroGen Pharma sold 4.5 million of its common stock shares at $13, within the revised range of $12 to $14 per share. The original pricing for the deal had been for the company to sell 3.5 million shares at a considerably higher range to make $48.5 million at the lower end of the spectrum. OroGen could have even made it to $55.7 million is underwriters exercised their overallotment option. With Thursday’s opening, UroGen Pharma got $58 million in IPO proceeds. Insiders may still execute their overallotments which total up to 519,230 of the company’s shares. The initial trading on UroGen Pharma’s shares brought it to a market cap of $150 million.
The joint managers of the IPO included Cowen & Co., Jeffries LLC, Oppenheimer & Co., and Raymond James and Associates.
UroGen Pharma was in a bad place before the IPO. In 2015, the company made losses of $12.7 million. The figure dropped to $1.9 million in the financial year ended December 31st, 2016 but the losses were a source of concern to investors.You would be worried too if the company you wanted to invest in was making losses even before it started earning from its products. And if that was not bad enough, UroGen was underperforming in a well-performing market. Firms such as Handok Inc. and Taris Biomedical are doing way better than UroGen, and they’re in the same market.
The company also had its saving graces. One, the market for the company’s products is set to increase therefore competitor concerns were downplayed. In the US alone, urothelial cancer patients are set to increase from 4 billion in 2016 to 5 billion as of 2020. The company was also lucky in the positive results that its products got in the first phases of their trials. UroGen Pharma’s partnership with Allergan also made it a viable IPO candidate. Allergan awarded UroGen Pharma’s trials $17.5 million in 2016 for a major milestone in development. As an investor, the partnership is beneficial in that you are more likely to get back your money with it. After all, Allergan carries all the risk. It’s the firm that will develop, get approval for and market the finished UroGen Pharma products.
UroGen Pharma intends to use the proceeds from the IPO to fund further clinical trials for VesiGel and MitoGel.