Quick Take
PainReform Ltd. (PRFX) has filed to raise $25 million in an IPO of its ordinary shares, according to an F-1 registration statement.
The firm is a clinical stage biopharma developing a treatment for post-operative pain relief.
PRFX has produced solid Phase 2 trial results to-date.
I’ll provide an update when we learn more about the IPO from management.
Company & Technology
Herzliya, Israel-based PainReform was founded to focus on the reformulation of existing therapeutics using its proprietary extended release drug delivery system for post-operative pain reduction.
Management is headed by Acting CEO and Chief Technology Officer Prof. Eli Hazum, who has been with the firm since 2012 and was previously Head of the Department of Receptor Research and Metabolic Diseases at Glaxo.
Below is a brief overview video of new strategies in post-operative pain management:
Source: Grand Rounds in Urology
The firm’s lead candidate is PRF-110 and is based on the existing, approved local anesthetic ropivacaine. The drug is an ‘oil-based, viscous, clear solution that is deposited directly into the surgical wound bed prior to closure to provide localized and extended post-operative analgesia.’ PRFX has been granted an IND by the U.S. FDA to conduct Phase 3 trials for PRF-110.
Investors in the firm have invested at least $6.7 million and include XT Hi-Tech Investments, D Partners and Medica III Investments.
Market & Competition
According to a 2019 market research report by Verified Market Research, the global market for post-operative pain management was valued at $30 billion in 2018 and is estimated to reach $45 billion by 2026.
This represents a forecast CAGR (Compound Annual Growth Rate) of 5.1% from 2019 to 2026.
Key elements driving this expected growth are a continued desire to reduce hospital stay times by reducing patient pain after surgery, an increasing number of cancer surgeries and increased pain relief options for patients.
Also, surgeries of aging populations are expected to increase in the coming years tending to require greater pain management resources.
Major competitive vendors that provide or are developing treatments include:
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Pacira Pharmaceuticals (PCRX)
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Fresenius Kabi USA (FMS)
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Hospira
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Heron Therapeutics (HRTX)
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Durect (DRRX)
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Innocoll
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Concentric Analgesics
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Taiwan Liposome Company (TLC)
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Liquidia Technologies (LQDA)
Financial Status
PainReform’s recent financial results are typical of a development stage firm in that they feature no revenue and significant R&D and G&A expenses associated with its program.
Below are the company’s financial results for the past two years:
Source: Company registration statement
As of December 31, 2019, the company had $941,000 in unrestricted cash and $6.8 million in total liabilities. (Unaudited, interim)
IPO Details
PainReform intends to raise $25 million in gross proceeds from an IPO of its ordinary shares, although the final amount may be different.
No existing shareholders have indicated an interest to purchase shares at the IPO price, although this element may become a feature of the IPO if disclosed in a future filing.
Management says it will use the net proceeds from the IPO as follows:
Based on proposals we received from contract research organizations, we estimate that the total cost of the two pivotal clinical trials will be approximately $16.5 million. We also intend to use approximately $1.5 million for development activities and preparation of initial NDAs, [as as-yet undetermined amount] for the purchase of directors and officers liability insurance and the balance for general corporate purposes, including general and administrative expenses and working capital. Commencing upon the completion of this offering, we expect to incur additional costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding. If we are unable to raise capital when needed or on attractive terms, we may be forced to delay, reduce and/or eliminate our research.
Management’s presentation of the company roadshow is not available.
Listed bookrunners of the IPO are Maxim Group and Joseph Gunnar & Co.
Commentary
PainReform is seeking a small IPO to pursue continued later stage trials for its sole candidate, PRF-110.
The drug has performed well in a Phase 2 proof of concept study for patients with hernia repair surgeries and the active ingredient, ropivacaine, is a safe and approved local anesthetic.
The market opportunity for providing post-operative pain reduction treatments is large and estimated to grow at a moderate rate over the coming years.
PRFX has disclosed no research or commercial collaborations to-date.
Management has performed well to extend ropivacaine’s treatment envelope from six hours to up to 72 hours without disruptive changes to the operative process, providing patients with a reduced post-operative pain profile.
When we learn more about the IPO, I’ll provide a final opinion.
Expected IPO Pricing Date: To be announced.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
