Sienna Biopharmaceuticals (Nasdaq: SNNA) filed an S-1/A for its upcoming initial public offering with the Securities and Exchange Commission and is expected to make its market debut on Thursday (7/27).
Sienna hopes to raise $65M, through its offer of 4,333,333 shares at a marketed price range of $14 to $16. It has an additional 650,000 shares over-allotted for its underwriters. Assuming Sienna prices at the midpoint of its proposed price range, it would have a market cap value of $317M.
The underwriters for the IPO are J.P. Morgan, Cowen and BMO Capital Markets.
Business overview
Sienna Biopharmaceuticals is a clinical-stage pharmaceutical company that is focused on developing innovative treatments for dermatological skin conditions and diseases. The company currently has three products in development. SNA-120 is in stage 2 trials and is meant to treat psoriasis and its associated itchiness. SNA-125 is in development to treat psoriasis, dermatitis and itchiness and is in the preclinical stage of development. Finally, SNA-001 is in development for the treatment of acne and unwanted hairs, and it is in the pivotal phase of development. All product candidates are pre-revenue stage. The company is based in Westlake Village, California.
(S-1/A)
Management team overview
Frederick C. Beddingfield III founded Sienna and has served as its chief executive officer and president since Jan. 2016. Mr. Beddingfield is a board-certified dermatologist and surgeon. He previously served as the chief medical officer of Kythera Biopharmaceuticals Inc. (March 2013 to Oct. 2015). Before that, he worked at Allergan (2003 to 2013), serving as the global therapeutic head of its dermatology and aesthetics division. He currently is an associate professor of medicine and dermatology at the University of California, Los Angeles School of Medicine. He holds a Bachelor of Arts in psychology from North Carolina State University, a medical doctorate from the University of North Carolina and a Doctor of Philosophy in policy analysis from the RAND Graduate School of Policy Studies.
Richard Peterson has served as the chief financial officer of Sienna, a position he has held since March 2017. Prior to that, he served as the CFO of Novan Inc. (Sept. 2015 to March 2017). Before joining Novan, Peterson invested in multiple companies (Dec. 2012 to Sept. 2015) and held numerous executive-level positions at Medicis Pharmaceutical Corporation (1995 to 2008). Mr. Peterson holds a Bachelor of Science in accountancy from Arizona State University.
Financial highlights and risks
The company does not generate revenue through the commercial sale of its product candidates and predicts it won’t be ready for commercialization for years. The company has been successful at raising money privately and has raised $86M in three rounds of private funding. Notable investors include ARCH Venture Partners, Venvest Capital, and Two River, among others.
The company generated net losses of $11.3M and $21.2M in 2015 and 2016. As of its IPO, it had accumulated deficits of $45.5 million. The company plans to use its proceeds to finance the development efforts of its three product candidates.
Conclusion
Sienna's clinical trials show promising results and the fact it has three product candidates moving forward in clinical trials spreads some of the risks.
Additionally, company insiders have expressed interest in purchasing shares which shows confidence internally. However, the company is years away from commercialization of its product candidates and has high spending needs for its continued research and development. For this reason, we recommend only growth investors with a high risk tolerance and looking for exposure to early-stage biopharma companies consider investing.
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