IPO Preview: Braeburn Pharmaceuticals

Overview

Based in Princeton, NJ, Braeburn Pharmaceuticals (Pending:BBRX) is commercializing an improved delivery mechanism, called Probuphine, which is used for treating opioid addiction. The company has additional related product candidates under development.

According to its most recent S-1 filing, Braeburn intends to sell 7.7 million shares in its IPO at a midpoint price of $19.50 per share. The deal is set to price this Wednesday evening, 2.1.2017. Joint bookrunners are J.P. Morgan, BofA Merrill Lynch, and Deutsche Bank; Canaccord Genuity is listed as a co-manager. The deal is currently oversubscribed.

Founded in 2012 to develop a treatment for central nervous system disorders, Braeburn is a wholly-owned portfolio company of Apple Tree Partners IV.

Braeburn Pharmaceuticals has indicated it will use the net proceeds to advance its product candidates and commercialize its lead product.

A full pipeline is below via the company's website.

Financial Performance

Braeburn's recent financial performance is typical for a newly commercialized stage bipharma, with high expenses and R&D, little to no revenues, and significant use of cash.

For the year ended December 31, 2015, Braeburn reported revenue of $25,000 and total expenses of $38.3 million. For the nine months ended September 30, 2016, the company reported unaudited revenue of $42,000 and expenses of $78 million. Net loss ticked in at $76.8 million.

As of September 30, 2016, the company reported total liabilities of $23.1 million and $23.5 million cash on-hand.

Market & Competition

According to a report from 2016 by the Department of Health & Human Services, the U.S. is in the middle of an opioid epidemic. Drug overdoses were to blame for more deaths in 2014 than ever before, and 60% of those overdoses involved an opioid. In 2014, an average of 78 people die per day in the U.S. from opioid-related overdoses.

From WebMD, EverydayHealth, and Drugfree.org, some current treatments include:

- Vivitrol (injectable naltrexone)
- Methadone (older, legacy treatment)
- Zubsolv (Orexo)
- Suboxone (buprenorphine and naloxone sublingual film)
- Subutex (Actavis) (generic buprenorphine sublingual tablets)

Braeburn lists its major competitors as Janssen Pharma as well as Otsuka Pharmaceutical Co. Neither is currently listed in the U.S.

Executive Management

The company's management team includes CEO and President Behshad Sheldon, previously of Otsuka Pharmaceuticals and Apple Tree Partners. Ms. Sheldon has worked on highly successful products, including Glucophage, Plavix, and Abilify. She holds a B.S. from the University of Rochester in Neuroscience.

Sonnie Kim, Pharm. D. holds the role of Senior Vice President, Clinical Development & Medical Affairs and previously worked at Otsuka America Pharmaceutical as Director of Clinical Strategy of Medscape as well as Director of Medical Affairs/Hospital Medicine. Dr. Kim holds a Doctorate of Pharmacy from the University of Maryland School of Pharmacy and a B.S. from University of Maryland Baltimore.

Conclusion

Due to the unfortunate rise of opioid-related overdoses, Braeburn's IPO timing is quite good.

The company has trained more than 2,400 healthcare providers to prescribe its implant device as well as more than 70 providers who have indicated that they will cover the cost of the device.

While Braeburn is still in early stages, it has already commercialized a leading product and is planning a full-scale commercial launch of Probuphine starting in the first quarter of 2017.

Political uncertainty regarding healthcare regulations does remain; however, we are optimistic on this company's prospects and its IPO this week.

We suggest growth investors consider obtaining at least a modest allocation.