Egalet Corporation — Update 1 April 2016

Egalet Corporation — Update 1 April 2016

Egalet Corporation

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Egalet Corporation

Innovating abuse deterrent drugs

Pharma & biotech

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1 April 2016

Price

$6.86

Market cap

$172m

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Share details

Code

EGLT

Listing

NASDAQ

Shares in issue

25.1m

Business description

Egalet, a specialty pharmaceutical company, is focused on developing, manufacturing and commercializing treatments for pain and other conditions based on its GUARDIAN technology for abuse deterrence and other applications. It has two approved products, OXAYDO and SPRIX, and a late-stage pipeline of clinical-stage, opioid-based product candidates.

Bull

Solid mix of commercial and late-stage clinical pipeline products

Proprietary abuse deterrent technology

Raised $86m (gross proceeds) in third quarter equity offering

Bear

Small salesforce for large and competitive marketplace

Potential capacity-based approval delays at US FDA

High spending from late stage pipeline and launches

Analysts

Beth Senko

+1 646 653 7026

Nathaniel Calloway

+1 646 653 7036

Christian Glennie

+44 (0)20 3077 5727

In late December, Egalet submitted an NDA for its Arymo ER abuse-deterrent (AD) morphine tablet – a widely prescribed opiate with few AD competitors. Management expects to complete clinical trials in early 2017 to support a mid 2017 NDA filing for its AD oxycodone tablet. If approved, this will open Egalet to the $2.5bn market for oxycontin with a proprietary AD formulation.

Advancing development pipeline

Egalet is a specialty pharmaceutical company focused on pain and other conditions where it can use its abuse-deterrent technology to add value to generic drugs. Egalet submitted an NDA for its Arymo ER (Egalet-001) AD morphine tablet in December with and has been assigned a 14 October 2016 PDUFA date. The company is in late-stage trials for its oxycodone tablet (Egalet-002) and expects clinical readouts of intranasal (H216) and oral (H117) human abuse potential studies to support an NDA in mid-2017.

Guardian – a unique AD technology

According to the 2014 National Survey on Drug Use and Health, 4.3 million Americans engaged in the non-medical use of prescription painkillers in one month. In response to the rise in opiate abuse, many states and other entities have introduced legislation requiring reimbursement for AD opiates. Drug manufacturers create AD formulations by changing either the physical or chemical properties of opiates. Egalet’s Guardian technology uses both heat and compression to physically alter the drug’s original manufactured form so that users cannot extract the opiate from the tablet by crushing, chewing, or mixing with a solvent.

Establishing commercial footprint

In early 2015, Egalet acquired and licensed the rights to two FDA-approved products: SPRIX and OXAYDO – helping to establish commercial presence with the key prescription writers ahead of Egalet’s anticipated new product rollouts. SPRIX is an intranasal non-steroidal anti-inflammatory drug for short-term management pain that requires opioid-level treatment. OXAYDO is an immediate-release oral formulation of oxycodone designed to deter abuse via snorting and the only approved immediate-release opiate with any AD properties.

Valuation: Well funded with EV of $81.7m

Egalet’s EV of $81.7m includes $55.7m debt. The company raised $81m net in August contributing to the $146m in cash on the balance sheet at the end of 2015.

Consensus estimates

Year
end

Revenue
($m)

PBT
($m)

EPS
($)

DPS
($)

P/E
(x)

Yield
(%)

12/15

22.8

(58.7)

(2.94)

0.0

N/A

N/A

12/16e

24.9

(79.6)

(3.17)

0.0

N/A

N/A

12/17e

86.4

(32.5)

(1.15)

0.0

N/A

N/A

Source: Bloomberg

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

Wincanton — Update 31 March 2016

Wincanton

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