IPO Preview: Harmony Biosciences Begins $100 Million IPO Push
Harmony Biosciences Holdings (HRMY) has filed an S-1 registration statement to raise $100 million in an IPO of its common stock.
The firm is a biopharma commercializing its WAKIX molecule for the treatment of excessive sleepiness in adult narcolepsy.
HRMY has initially grown revenue quickly as it begins to commercialize its primary product.
Plymouth Meeting, Pennsylvania-based Harmony was founded to commercialize a drug to treat narcolepsy that is not scheduled as a controlled substance.
Management is headed by president and chief executive John Jacobs, who has been with the company since October 2017 and previously worked as SVP and general manager of the Respiratory Business Unit at Teva Pharmaceuticals (TEVA).
Below is a brief overview video of narcolepsy:
The firm's in-licensed drug, WAKIX (pitolisant), is also nearing FDA approval for the treatment of cataplexy and for treatment of pediatric forms of narcolepsy.
Below is the current status of the company's drug development pipeline:
Source: Company S-1 Filing
Investors in the firm have invested at least $422 million and include Valor, Fidelity, HBM Healthcare, Vivo Capital, Marshman Fund Trust, Novo Holdings, Quantum Strategic Partners and venBio.
The global demand for narcolepsy care was estimated at $2.4 billion in 2018 and is expected to reach $5.3 billion by 2026, according to a 2019 market research study by Allied Market Research.
It reflects a CAGR (Compound Annual Growth Rate) estimate of 10.3 per cent between 2019 and 2026.
Key factors driving this anticipated growth are increasing narcolepsy risks from elevated alcohol , tobacco and coffee intake, along with improvements in treatment services and enhanced reimbursement for government-approved treatments.
However, a lack of awareness regarding diagnosis and treatment options may dampen growth.
Extreme daytime sleepiness is expected to produce the highest demand for drug treatments followed by cataplexia, as seen in the chart below:
Major competitive vendors that provide or are developing treatments include:
- Jazz Pharmaceuticals (JAZZ)
- Avadel Pharmaceuticals (AVDL)
- Axsome Therapeutics (AXSM)
Management says its WAKIX drug 'has a safety and efficacy profile that is competitive with each of the above-mentioned products for the treatment of EDS in adult narcolepsy patients, although WAKIX has not been compared in head-to - head clinical trials with these products, and that its non-scheduled status represents a distinct competitive advantage over those same products.'
The financial statements for the last two and 1⁄4 years of the company (Audited PCAOB for full years) are below:
Source: Company registration statement
The Company had $71.5 million in cash and $212.8 million in total liabilities as of March 31 , 2020. (Interim (Unaudited)
Harmony plans to raise gross proceeds of $100 million from an IPO of its common stock, but the final sum may vary.
No current shareholders have indicated an interest in buying shares at the IPO price, although if disclosed in future filing this item could become an IPO feature.
The management says the net proceeds from the IPO will be used as follows:
to fund the potential new indications for pitolisant in PWS, MD and pediatric narcolepsy through clinical development; and
the remainder for working capital, business development opportunities, a potential milestone payment to Bioprojet and general corporate purposes, including to support the continued commercialization of WAKIX in the United States.
Management 's presentation of the company roadshow is not available.
IPO bookrunners listed include Goldman Sachs, Jefferies and Piper Sandler.
Harmony is finding public investment capital to continue its WAKIX marketing by ramping up efforts and extending its TAM with additional pitolisant indication treatments.
In the years ahead, the market demand for therapies for various conditions within the narcolepsy diagnosis is projected to develop rapidly.
The company has licensed the WAKIX drug, and as Harmony increases sales, it will have to make royalty and milestone fees to licensor Bioprojet. The I
The company 's investor syndicate includes several well-known and highly regarded venture capital firm investors.
Goldman Sachs is the lead-left underwriter and the company-led IPOs have produced an average return of 83.3 percent since their IPO in the last 12 months. This is a top-tier performance for all major underwriters during the period.
Harmony has interesting prospects for its primary product as it begins the commercialization process.
I look forward to hearing from management about the pricing and valuation expectations of the IPO.
Expected IPO Pricing Date: To be announced.
(I have no position in any stocks mentioned as of the article date, no plans to initiate any positions within the next 48 hours, and no business relationship with any company whose stock is mentioned in this article. IPO stocks can be very volatile in the days immediately after an IPO. Information provided is for educational purposes only, may be in error, incomplete or out of date, and does not constitute financial, legal, or investment advice.)
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