IPO Preview: PaxMedica Files For $18 Million U.S. IPO

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PaxMedica (PXMD) intends to raise $18 million in an IPO of its common stock, according to an S-1 registration statement.

The company is developing various forms of suramin for autism, Fragile X syndrome, African sleeping sickness and other neurodevelopmental indications.

PXMD appears to be thinly capitalized and is performing Phase 2b trials in South Africa for its lead candidate.

Woodcliff Lake, New Jersey-based PaxMedica was founded to advance programs based on anti-purinergic therapies for neurodevelopmental disorders such as autism spectrum disorder [ASD] and Fragile X syndrome tremor-ataxia.

Management is led by Chief Executive Officer Mr. Howard Weisman, who has been with the firm since March 2020 and was previously founder and Executive Chairman of Sofregen, a clinical stage biomedical device firm in the reconstructive plastic surgery industry.

Below is a brief overview video of ASD:

Source: Medscape

The firm's lead candidate, PAX-101, is an intravenous-delivered suramin formulation that it is developing for autism, Fragile X and Human African Trypanosomiasis [HAT].

PAX-101 is currently 60% complete in enrolling patients in a Phase 2b trial in South Africa for the treatment of ASD, with an expectation completion date by the end of 2020 and data readout by ‘early in 2021.’

PXMD believes it can achieve regulatory approval for the HAT indication, then monetize the potential receipt of an FDA priority review voucher in order to fund its other indication programs.

Investors in the firm have invested at least $1.2 million and include TardiMed Sciences.

According to a 2018 market research report by Market Research Future, the global market for autism spectrum disorder [ASD] was valued at $5.1 billion in 2016.

This represents a forecast CAGR (Compound Annual Growth Rate) of 4.73% from 2017 to 2023.

Key elements driving this expected growth are continued growth in the range of neurodevelopmental disorder incidence as well as growing governmental support and forecasted approvals of various off-label treatment options by the FDA.

However, the market faces a small pipeline of drugs due to the generally 'unknown etiology and pathophysiology of ASD.'

Major competitive vendors that provide or are developing treatments include:

  • CureMark
  • Yamo Pharmaceuticals
  • GW Pharmaceuticals (GWPH)
  • Zynerba Pharmaceuticals (ZYNE)
  • QBioMed
  • Other major pharma firms

Management says there are 'no known treatments or active development programs' for Fragile X syndrome.

PaxMedica’s recent financial results indicate the firm has earned no revenue and has a small amount of G&A and R&D expenses associated with its development activities.

Below are the company’s financial results from April 5, 2018 through the end of 2019:

paxmedicapl

Source: Company registration statement

As of March 31, 2020, the company had $249,804 in cash and $217,114 in total liabilities. (Unaudited, interim)

PaxMedica intends to raise $18 million in gross proceeds from an IPO of its common stock, 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:

We currently expect to use the net proceeds from this offering for product development activities, including clinical and regulatory research and development for our product candidates, and the remainder for working capital and other general corporate purposes, including the payment of accrued but unpaid salaries and the associated costs of operating as a public company. Based on our current projections, we believe the net proceeds of this offering will fund our operations through the end of the second fiscal quarter of 2022. At that time, we expect the net proceeds from this offering to have funded (i) the receipt of NDA approval (and the potential award of a tropical disease PRV) for the HAT indication, and (ii) submission of IND applications for the ASD and FXTAS indications.

Management’s presentation of the company roadshow is not available.

The sole listed bookrunner of the IPO is The Benchmark Company.

Commentary

PaxMedica is seeking a small IPO to fund its sole candidate’s further development.

Management believes there is a high probability for approval of its HAT indication which it can then monetize into further funding for its ASD and FXTAS indication development.

Whether that is a reasonable assumption is anyone’s guess, while the IPO’s proceeds will only fund the company’s operations for 18 months or so.

The market opportunity for treating ASD conditions is substantial and expected to grow at a moderate rate in the years ahead.

The firm has no disclosed research or commercial collaborations and is thinly capitalized.

The company’s investor syndicate includes TardiMed Sciences, a science incubation/acceleration firm of sorts with a small portfolio and no obvious track record.

The Benchmark Company is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of negative (40.7%) since their IPO. This is a bottom-tier performance for all major underwriters during the period.

When we learn more about the IPO, I’ll provide a final opinion.

Expected IPO Pricing Date: To be announced.

Glossary Of Terms

(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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