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IPO Preview: Advanced Accelerator Applications S.A.

Based in Saint Genis Pouilly, France, Advanced Accelerator Applications S.A. (Pending:AAAP) has scheduled a $75 million IPO on Nasdaq, with a market capitalization of $518 million, at a price range midpoint of $14, for Thursday, February 5, 2015.

The full IPO calendar is available at IPOpremium.

SEC Documents

Manager, Joint-managers: Citigroup, Jefferies
Co-managers: Canaccord Genuity, JMP Securities

End of lockup (180 days): Tuesday, August 4, 2015
End of 25-day quiet period: Monday, March 2, 2015

AAAP is an innovative radiopharmaceutical company that develops, produces and commercializes MNM (molecular nuclear medicine) diagnostic and therapeutic products.

MNM is a medical specialty that uses trace amounts of radioactive compounds to create functional images of organs and lesions and to treat diseases such as cancer.


Accumulated deficit ($mm) . . -$34
Per share dilution . . -$8.56
Valuation Ratios Mrkt. Cap ($mm) Price /Sls Price /Erngs Price /BkVlue Price /TanBV % offered in IPO
Annualizing Sept. 9 mos.
Advanced Accelerator Applications S.A. $518 6.6 -134.0 2.7 3.6 15%


Molecular nuclear medicine diagnostic and therapeutic products.

MNM market exceeds $4.1bb

29% top line rev. growth to $59mm for Sept. 9 mos.

The therapeutic candidate is in a pivotal Phase 3 trial

Price-to-book of 2.7

P/E ratio of -134 indicating low cash burn relative to market cap

Net loss -5% of rev

Shareholder may purchase $10mm on the IPO

TIP-Pre IPO S.p.A may purchase $5mm of registered shares

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.

AAAP is an innovative radiopharmaceutical company that develops, produces and commercializes MNM (molecular nuclear medicine) diagnostic and therapeutic products.

MNM is a medical specialty that uses trace amounts of radioactive compounds to create functional images of organs and lesions and to treat diseases such as cancer.

AAAP has built a leadership position in MNM in Europe by manufacturing and commercializing its broad portfolio of six diagnostic products for a number of clinical indications, and by selectively acquiring and integrating complementary businesses and assets.

The company leverages its leadership position, industry experience and know-how to pursue targeted R&D strategies.

Sales from six diagnostic PET and SPECT products
The foundation of AAAP’s growth has been its portfolio of six diagnostic PET and SPECT products.

PET and SPECT are imaging techniques in MND with applications in clinical oncology, cardiology, neurology and inflammatory/infectious diseases.

The leading diagnostic product is Gluscan, a branded 18-fluorodeoxyglucose, or FDG, PET imaging agent.

Gluscan assists in the diagnosis of serious medical conditions, primarily in oncology, by assessing glucose metabolism.

AAAP is building on its diagnostics foundation by developing additional MND product candidates to further strengthen its existing portfolio.

The company is in preclinical development for Somakit, Lutathera’s companion PET diagnostic candidate, and has initiated Phase 1/2 clinical trials for rhAnnexin V-128, or Annexin V-128, a SPECT product candidate for the imaging of apoptotic and necrotic lesions, with applications in a broad range of indications, such as rheumatoid arthritis.

AAAP’s total sales have grown from €40.8 million (US$51.5 million) for the year ended December 31, 2012 to €53.8 million (US$67.9 million) for the year ended December 31, 2013, and from €38.9 million (US$49.1 million) for the nine months ended September 30, 2013 to €50.2 million (US$63.3 million) for the nine months ended September 30, 2014.

MNM (molecular nuclear medicine) market
The global MNM market is estimated at approximately US$4.1 billion as of December 31, 2013 (with 96% of sales in MND and 4% of sales in MNT, or molecular nuclear therapy), according to MEDraysintell.

While the market is largely concentrated in MND, where AAAP has a leading position in Europe, MNT represents a fast-growing field in MNM.

MEDraysintell projects that MNT sales may constitute up to US$13.0 billion of total MNM sales of US$24.0 billion by 2030, representing an annual growth rate of 30%.

Diagnostic products
AAAP’s leading diagnostic product is Gluscan, its branded FDG PET imaging agent.

Lead therapeutic candidate
AAAP’s lead therapeutic candidate, Lutathera, is a novel compound that the company is currently developing for the treatment of midgut NETs, a significant unmet medical need.

Lutathera is a Lu-177-labeled somatostatin analogue peptide that has received orphan drug designation from the EMA and the FDA, and is currently administered on a compassionate-use and named-patient basis for the treatment of NETs in nine European countries.

Lutathera in a pivotal Phase 3 trial
AAAP has identified that Lutathera has been used in over 2,900 patients, and is currently in a pivotal Phase 3 trial for the treatment of progressive inoperable midgut NETs.

Intellectual property
With respect to its products Gluscan, IASOflu, IASOdopa and IASOcholine, AAAP relies on a combination of marketing authorization and owned and licensed know-how, technology and trademarks to maintain its competitive advantage.

AAAP holds a trademark registration for GLUSCAN in France, and an international registration under the Madrid system.

The company also licenses trademark registrations for IASOFLU, IASODOPA and IASOCHOLINE in Austria, Germany, France, Hungary, Italy and the Czech Republic.

These products are not currently covered by any issued patents or pending patent applications in any jurisdictions.

As of October 1, 2014, AAAP owned or exclusively licensed a total of 55 issued patents and 18 patent applications covering certain aspects of Lutathera, Annexin V-128 and Somakit in various jurisdictions throughout the world, including original filings, continuations and divisional applications.

Because PET products have a short shelf life of approximately ten hours, AAAP’s competition is limited to companies and organizations with manufacturing infrastructure located within a distance that allows for rapid delivery to nuclear medicine facilities.

The company faces competition in the field of PET from other manufacturers of PET products, principally IBA Molecular, which specializes in radiation therapy and diagnostics and operates throughout the world with over 50 locations in the United States, Europe and Asia.

AAAP also faces competition from larger healthcare companies, such as GE Healthcare, which have varying degrees of investment in PET, but whose products and sales comprise a significant proportion of the MNM market.

In addition, it faces competition from local companies and university hospitals that operate within specific geographic areas.

While these competitors may have more limited manufacturing infrastructure than AAAP does, they may have greater experience or a more established reputation in these areas.

AAAP faces competition in the field of SPECT from a greater number of SPECT manufacturers than it does in PET, given the more established and widespread use of SPECT imaging.

Competitors include both large healthcare companies such as GE Healthcare and IBA Molecular, and smaller diagnostic imaging companies.

AAAP’s lead therapeutic candidate, Lutathera, is the first ever radiopharmaceutical product candidate to enter European and U.S. Phase 3 clinical trials for the treatment of progressive midgut NETs.

However, Lutathera faces competition from existing cancer treatments, including standard chemotherapy treatments that are not approved for the midgut NET indication.

Competing drugs that target the same or similar NETs targeted by Lutathera (though they are not approved for the same indication as Lutathera) include Sandostatin® and Afinitor®, both from Novartis, Somatuline® from Ipsen and Sutent® from Pfizer.

5% shareholders pre-IPO
Stefano Buono 8.0%

Andrea Ruben Osvaldo Levi 7.9% ​

Carpéfin S.r.l. 5.6%​​

HBM Healthcare Investments (Cayman) Ltd. ​7.9%​​

Life Sciences Capital S.p.A. 6.8% ​

Sergio Dompé S.r.l. 8.9%

No dividends are planned.

Use of proceeds
AAAP expects to receive $63 million from its IPO and use it for the following:

  • US$15.0 million for clinical trials and other R&D efforts for its principal pipeline product candidates, Lutathera, Annexin V-128, and Somakit, as follows, with any additional funding for the completion of such trials to be obtained from cash on hand –

    ​- US$10.0 million for a contemplated Phase 3 trial for Lutathera for treatment of pNETs, which potentially could begin by the end of 2015;
    ​- US$4.0 million for the Phase 1/2 trials for Annexin V-128 to evaluate its safety, pharmacokinetics and dosimetry in patients with rheumatoid arthritis or ankylosing spondylitis; and
    – ​US$1.0 million for Somakit’s development for the diagnosis and management of somatostatin receptor-positive NETs;

  • ​US$38.4 million for expanding its manufacturing infrastructure and commercialization capabilities and organizing distribution to additional markets and geographies, including:

    – ​US$33.9 million for investing in expanding its commercialization infrastructure for Lutathera, including additional personnel;
    ​- US$4.0 million for the construction or acquisition of a U.S. site dedicated to the production of Lutathera with an estimated initial capital investment of  €7.5 million (US$9.5 million); and
    – US$0.5 million for modifications to its F-18 production site in Zaragoza, Spain, in order to enable it to produce Lutathera in addition to F-18 products; and

  • ​the remainder for general corporate purposes, including R&D efforts for its other product candidates and acquisitions of, or investment in, businesses or assets to expand any of the above.

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