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About the Author IPOdesktop

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: Bellerophon Therapeutics


Based in Hampton, New Jersey, Bellerophon Therapeutics (Pending:BLPH) scheduled a $60 million IPO on Nasdaq with a market capitalization of $179 million, at a price range midpoint of $15, for Friday, February 13, 2015.

The full IPO calendar is available at IPOpremium.

SEC Documents

Manager, Joint-managers: Leerink Partners, Cowen and Company
Co-managers: FBR, SunTrust Robinson Humphrey

End of lockup (180 days): Wednesday, August 12, 2015
End of 25-day quiet period: Tuesday, March 10, 2015

Summary
BLPH is a clinical-stage therapeutics company focused on developing innovative products at the intersection of drugs and devices that address significant unmet medical needs in the treatment of cardiopulmonary and cardiac diseases.

BLPH has two programs in advanced clinical development.

Valuation
Glossary

Accumulated deficit ($mm)..-$41
Per share dilution..-$7.63
———————————————-
Valuation RatiosMrkt. Cap ($mm)Price /SlsPrice /ErngsPrice /BkVluePrice /TanBV% offered in IPO
Annualizing Sept. 9 mos.
Bellerophon Therapeutics$180no rev-2.92.02.033%

Conclusion
Neutral

  • Focused on cardiopulmonary and cardiac diseases
  • P/E of -2.9, indicating very heavy cash burn relative to market cap
  • Phase 3 clinical trial planned for 2nd half of 2015
  • Price-to-Book 2.0
  • No revenue
  • Accounting inconsistency, accumulated deficit reported as -$41mm, but the company lost -$150mm over the last 2 years

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

Business
BLPH is a clinical-stage therapeutics company focused on developing innovative products at the intersection of drugs and devices that address significant unmet medical needs in the treatment of cardiopulmonary and cardiac diseases.

BLPH has two programs in advanced clinical development.

INOpulse
The first program, INOpulse, is based on BLPH’s proprietary pulsatile nitric oxide delivery device.

BLPH is currently developing two product candidates under BLPH’s INOpulse program: one for the treatment of pulmonary arterial hypertension, or PAH, for which BLPH intends to commence Phase 3 clinical trials in the second half of 2015, and the other for the treatment of pulmonary hypertension associated with chronic obstructive pulmonary disease, or PH-COPD, which is in Phase 2 development.

Bioabsorbable cardiac matrix
BLPH’s second program is bioabsorbable cardiac matrix, or BCM, which is currently in a placebo-controlled clinical trial designed to support CE mark registration in the European Union.

The company completed enrollment of this trial in December 2014, with 303 patients having completed the treatment procedure, and BLPH expect to report top line results in mid-2015.

Assuming positive results, BLPH intends to conduct a pivotal pre-market approval trial of BCM beginning in the first half of 2016, which will be designed to support registration in the United States.

BLPH is developing BCM for the prevention of cardiac remodeling, which often leads to congestive heart failure following an ST-segment elevated myocardial infarction, or STEMI.

BLPH’s INOpulse program is an extension of the technology used in hospitals to deliver continuous-flow inhaled nitric oxide.

Use of inhaled nitric oxide is approved by the U.S. Food and Drug Administration, or the FDA, and certain other regulatory authorities to treat persistent pulmonary hypertension of the newborn.

Ikaria, Inc., or Ikaria, the pre-spinoff parent, has marketed continuous-flow inhaled nitric oxide as INOmax for hospital use in this indication since approval in 1999.

Intellectual property
As of January 12, 2015, BLPH holds exclusive licenses from Ikaria to at least 80 patents and pending patent applications in both the United States and foreign countries, including Australia, Brazil, Canada, China, Europe, Hong Kong, India, Indonesia, Israel, Japan, Korea, Mexico, the Philippines, Russia and Singapore.

Certain of these issued patents and patent applications, if issued, will expire as late as 2033. These patent rights have been exclusively licensed for the treatment of patients with PAH, PH-COPD and PH-IPF and cover methods of delivery and the drug delivery device, as well as important safety features and the ornamental design of the drug delivery device.

A primary basis for patent exclusivity is based on pending and issued in-licensed patents directed to proprietary methods of administering pulsed inhaled nitric oxide, as well as a device for delivering the same.

This patent family expires as late as 2027 in the United States and as late as 2026 in Australia, Brazil, Canada, China, Europe, Hong Kong, Japan and Mexico.

Competition
Currently, there are 12 drugs approved for the treatment of PAH, within the following categories:

  • Rostacyclin and prostacyclin analogs (including Flolan (epoprostenol), which is marketed by GlaxoSmithKline (NYSE:GSK);
  • Tyvaso (treprostinil), Orenitram (treprostinil) and Remodulin (treprostinil), which are marketed by United Therapeutics Corporation (NASDAQ:UTHR);
  • Ventavis (iloprost) and Veletri (epoprostenol), which are marketed by Actelion Pharmaceuticals US, Inc. (or Actelion) (OTCPK:ALIOF);
  • Phosphodiesterase type-5 inhibitors (including Adcirca (tadalafil), which is marketed by United Therapeutics Corporation;
  • Revatio (sildenafil), which is marketed by Pfizer Inc. (NYSE:PFE);
  • Endothelin receptor antagonists (including Letairis (ambrisentan), which is marketed by Gilead Sciences, Inc. (NASDAQ:GILD);
  • Opsumit (macitentan) and Tracleer (bosentan), which are marketed by Actelion; and
  • A soluble guanylate cyclase stimulator (Adempas (riociguat), which is marketed by Bayer HealthCare Pharmaceuticals Inc. (OTCPK:BAYZF).
  • Actelion recently submitted an NDA to the FDA for selexipag, a selective prostacyclin receptor agonist.

5% shareholders pre-IPO

  • New Mountain Entities 47.9%
  • Linde 16.1%
  • ARCH 9.5%
  • Venrock 9.5%
  • Jens Luehring 16.1%
  • Robert Nelsen 9.5%

Dividends
No dividends are planned.

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

  • $45 million to fund its planned Phase 3 clinical development of INOpulse for PAH; and
  • the remainder for working capital and other general corporate purposes.