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During the IPO season Francis Gaskins, editor of IPOdesktop.com & director of research for Equities.com, regularly appears on CNBC TV, Bloomberg, thestreet.com & other financial cable channels. On the day of the Visa IPO he appeared on four cable TV financial shows including Bloomberg & CNBC. Over the past five years he has been quoted over 500 times by such financial media as the Wall Street Journal, Bloomberg, Reuters, Associated Press, USA Today among others. Those quotes are available at IPOdesktop.com. His varied personal interests include violin playing. For example, he is concertmaster of the Palisades Symphony. He also holds an MBA from Harvard Business School (finance) and an AB from Princeton University (economics).

IPO Preview: Neothetics

Targeting an aesthetic market.

Seeking approval of lead product candidate, LIPO-202, for the reduction of central abdominal bulging due to subcutaneous fat in non-obese patients, an indication for which there is no FDA-approved drug.


Valuation Ratios

Mrkt Cap ($mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

annualizing Sept 9 mos














Market Do-



1-5, 5 is high







20 is perfect






C, 5.5


Stockholders & others may purchase up to $27mm, 45%

Price-to-book of 2.9

P/E of -17.5 indicating moderate cash burn relative to market cap

No collaborators

Targeting an aesthetic market

Top line Phase 3 results expected end of ’15

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

NEOT is a clinical-stage specialty pharmaceutical company developing therapeutics for the aesthetic market.

NEOT’s initial focus is on localized fat reduction and body contouring.

NEOT’s lead product candidate, LIPO-202, is a first-in-class injectable formulation of the long-acting ß2-adrenergic receptor agonist, salmeterol xinafoate, which is an active ingredient in the U.S. Food and Drug Administration, or FDA, -approved inhaled products SEREVENT DISKUS, ADVAIR HFA and ADVAIR DISKUS.

Reduction of central abdominal bulging due to subcutaneous fat in non-obese patients.
NEOT is currently developing and intend to seek approval for LIPO-202 for the reduction of central abdominal bulging due to subcutaneous fat in non-obese patients.

NEOT uses the term central abdominal bulging to describe subcutaneous fat in the central abdomen that is often characterized by people as love-handles, a pot-belly, a pouch or stomach rolls, among a number of other commonly used terms, pursuant to which there is no FDA-approved drug.

Clinical trials
NEOT has completed Phase 2 development of LIPO-202, showing a statistically significant reduction in central abdominal bulging due to subcutaneous fat in non-obese patients.

NEOT has tested its injectable formulations of salmeterol xinafoate in approximately 800 patients across multiple clinical trials, and these injectable formulations were consistently well tolerated with a safety profile similar to placebo.

NEOT intends to conduct two pivotal U.S. Phase 3 trials of LIPO-202 and expect top-line data at the end of 2015.

If its trials are successful, NEOT expects to file a new drug application, or NDA, in the second half of 2016 utilizing the 505(b)(2) regulatory pathway, which permits NEOT to file an NDA where at least some of the information required for approval comes from studies that were not conducted by or for NEOT, and to which NEOT does not have a right of reference, and allows NEOT to rely to some degree on the FDA’s finding of safety, and approval of, another product containing salmeterol xinafoate, the active ingredient in LIPO-202.

If approved by the FDA, NEOT believes LIPO-202 will be a best-in-class non-surgical procedure for localized fat reduction and body contouring.

According to the American Society for Aesthetic Plastic Surgery, or ASAPS, Americans spent more than $12 billion on cosmetic procedures in 2013. Additionally, ASAPS estimated that from 1997 to 2013, surgical aesthetic procedures increased by approximately 88% and non-surgical procedures increased by approximately 520%, reflecting continued acceptance of cosmetic surgery and increasing consumer demand for all types of aesthetic procedures, particularly injectable and non-surgical procedures.

According to NEOT’s market research, the central abdomen is the area on the body that patients want treated most for fat reduction and body contouring.

Current FDA-approved treatment options to address this patient demand are limited to surgical options, such as lipoplasty, or liposuction, and FDA-approved non-surgical options, such as energy-based medical devices.

These surgical and non-surgical options are designed to remove, damage or kill fat cells, and in many cases can cause adverse consequences for the patient.

For instance, while liposuction procedures remove fat, they require significant physician skill and resources, involve pain, require extended recovery time and carry the risks associated with any surgical procedure.

Existing non-surgical options are often painful, may produce limited or inconsistent results and may require multiple or ongoing maintenance treatments resulting in longer aggregate treatment time than LIPO-202.

Unlike existing treatment options, LIPO-202 is administered in a quick, simple, subcutaneous injection procedure that activates a natural metabolic process to shrink fat cells, without killing them, resulting in localized fat reduction, measurable results within four weeks and minimal risk with no downtime.

Intellectual property
As of September 30, 2014, NEOT was the sole owner of a patent portfolio that includes three issued patents and seven pending patent applications in the United States, as well as granted and pending foreign counterparts of such U.S. patents and pending applications directed to LIPO-202 and/or LIPO-102.

NEOT’s foreign counterparts include issued or granted patents and pending applications in Australia, Canada, various countries in Europe, Israel, Japan, South Korea, Mexico, China, Brazil, Hong Kong, Singapore, India, and Taiwan.

The earliest expiration of any of NEOT’s issued or granted patents is presently expected to occur in 2026. Two of NEOT’s three issued U.S. patents, specifically U.S. Pat. Nos. 8,420,625 and 8,404,750, cover both of its LIPO-202 and LIPO-102 product candidates, and will be listable in the Orange Book for each of these product candidates upon product approval.

The ‘625 patent is directed to methods of treatment for reduction of adiposity using a long-acting substantially selective beta agonist and is expected to expire no earlier than 2026.

The aesthetic market, and in particular the market for fat reduction and body contouring, is highly competitive and is rapidly evolving due to new technology introductions.

The FDA has recently approved several modalities for the reduction of fat, most of which are energy-based medical devices.

None of the products approved to date are injectable drugs like LIPO-202.

However, NEOT is aware that ATX-101, an injectable deoxycholic acid, is a drug in development for the treatment of submental fat, or fat located in the chin area, by Kythera, Inc. in the United States.

While NEOT does not believe that ATX-101 will receive an FDA-approved indication for fat reduction in the abdomen in the intermediate future, it is possible that physicians may use this product off-label in that manner.

In addition, while NEOT is unaware of any potentially competitive injectable drugs that may reach the market before LIPO-202 for the reduction of central abdominal bulging due to subcutaneous fat, NEOT anticipates that LIPO-202, if approved, will face significant competition from surgical alternatives for the reduction of central abdominal bulging due to subcutaneous fat and other medical device technologies designed for the reduction of fat.

5% shareholders pre-IPO
Alta Partners VIII, L.P. 30%

Entities affiliated Domain Partners 35%

RMI Investments S.à.r.l. 17%

Maxim Gorbachev 17%

Daniel S. Janney 30%

Kim P. Kamdar, Ph.D. 35%

No dividends are planned

Use of proceeds
NEOT expects to receive $53 million from its IPO and use it for the following:

$37.5 million of the net proceeds from this offering to conduct and advance its U.S. Phase 3 clinical trials to support the registration of LIPO-202 for the reduction of central abdominal bulging due to subcutaneous fat in non-obese patients and other supplemental studies of LIPO-202 as follows:

$0.8 million to fund its LIPO-202-CL-12 clinical trial to support registration;

$11.0 million to fund its LIPO-202-CL-18 clinical pivotal trial;

$11.0 million to fund its LIPO-202-CL-19 clinical pivotal trial;

$3.6 million to fund its LIPO-202-CL-21 clinical trial to support registration;

$5.6 million to fund its LIPO-202-CL-22 clinical trial to support registration;

$4.0 million to fund its LIPO-202-CL-23 clinical trial to support registration;

$1.0 million to fund its LIPO-202-CL-25 clinical supplemental trial; and

$0.5 million to fund its LIPO-202-CL-26 clinical supplemental trial.

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