Another Israeli Company on the NASDAQ: UroGen raises 58 million dollars in IPO

The offering by UroGen, which develops drugs to treat patients with bladder cancer, was based on a pre-money valuation of 98 million dollars

05.05.17 | Yoram Gabizon

UroGen Pharma, which is held by Mori Arkin and the Pontifax Fund, has raised 58 million dollars in an initial public offering (IPO) of its shares on NASDAQ. UroGen issued 4.5 million shares at a price of 13 dollars each, which is the midpoint within the range of prices planned for the issue. UroGen did however increase the number of shares it issued in comparison with the early plan. The IPO reflects a market cap of 156 million dollars post-money, and 98 million dollars pre-money.

The underwriters Jefferies and Cowen received an option exercisable within 30 days to buy an additional 671 thousand shares from the company at the issue price, that is, 15% of the initial issue. If they exercise the option, UroGen will raise another 4.8 million dollars. Trading in the UroGen shares began last night under the symbol URGN and, on its first day of trading, the share rose by 7.5% to 14 dollars.

UroGen, which was founded in 2004, had thus far raised 36 million dollars from the issue of shares and from an upfront payment of 17.5 million dollars which it received in October 2016 from Allergan Pharmaceuticals, as part of a commercialization agreement for one of the drugs in the pipeline of products UroGen is developing.

UroGen, which has 29 employees, develops drugs whose goal is to change the treatment standard in patients with bladder cancer. The two most advanced products in its development pipeline – VesiGel and MitoGel – are original formulations of the chemotherapy drug Mitimycin C, which is a generic drug used in treatment of bladder cancer, although this is not its original indication.

VesiGel and MitoGel are based on RTGel – Reversed Thermally Triggered Hydrogel, the original technology that provides a delayed release of the active ingredient, increases the length of time the active substance remains in the body, and improves the lining of the tissue being treated by it.

RTGel is a liquid, polymeric substance at low temperatures, which turns into a gel when heated. It is therefore easy to insert it into the body cavities, and improves the time the active ingredient remains effective. The drugs are based on the RTGel technology developed by UroGen and will be administered locally using a catheter.

UroGen estimates that its two leading drugs could improve the quality of life of the patients, and serve as an alternative to expensive surgical operations for removing cancerous growth tissue as the first-line treatment, as well as reducing the need to remove the bladder, the kidney and the lining of the upper part of the urinary tract system. UroGen notes that the cost of treating bladder cancer in the United States may grow from 4 billion dollars in 2010 to 5 billion dollars in 2020.

Cancer of the bladder is a disease that afflicted 625 thousand Americans in 2012. Each year 80 thousand more patients are diagnosed in the country. The prevalence of the disease among the segment that UroGen intends to serve is 325 thousand patients and 14 thousand new cases which are diagnosed each year, at a time when no new drug has been approved in the United States for this disease in the last 15 years.

UroGen received ‘orphan drug’ designation for MitoGel, and started a clinical trial at Phase III, the critical stage in the treatment of a single branch, meaning without comparison to a placebo or competing treatment for low-grade bladder cancer. UroGen plans to seek approval through the 505(b)(2) regulatory pathway, which is a rapid approval route for drugs that are based on active substances that have been tried and approved.

UroGen is also examining the efficacy and safety of VesiGel, which is a high-dosage and delayed release formulation in Non-Muscle Invasive Bladder Cancer (NMIBC) in Europe and in Israel in a Phase II clinical trial. Completion of this phase of the trial is expected in the second quarter of 2017. 19 of the 22 participants so far – namely 86% of those who received the high dosage of the medication – experienced a complete cessation of tumor growth at the time of assessment. In 79% of the participants who experienced a complete cessation of the tumor growth, no recurrence of the tumor was found during a 12-month follow-up.

UroGen is also developing BotuGel, which is a version based on RTGel technology – the Company’s original Botox technology. The company believes that BotuGel has the potential to be effective in treating an overactive bladder.

UroGen commercialized the rights to develop and commercialize ButoGel to Allergan, the company which sold Actavis Generics to Teva Pharmaceuticals for 37 billion dollars, and developed Botox for aesthetic treatments. Allergan plans to start a Phase II clinical trial with ButoGel in the second half of 2017. UroGen is entitled to receive additional payments of up to 207 million dollars from Allergan for meeting development and regulatory milestones, and for reaching sales targets. Since its inception, UroGen has accumulated a loss of 27 million dollars.

The Israeli shareholders in UroGen, whose accounting firm is PwC Israel, include Mori Arkin’s Arkin Communications, which holds 21% of the company’s shares, and the Pontifax Fund, which is managed by Ran Nussbaum, and holds 16.7% of its shares. Another prominent shareholder is Arie Belldegrun, Chairman of the company, who holds 3.1% of its shares. Belldegrun is a Professor of Urology, and serves as Director of the Institute of Urologic Oncology at the Medical School at UCLA, making him an opinion leader in the field in which UroGen operates. Belldegrun is best-known as Chairman, Founder and CEO of Kite Pharma, one of the world’s leading companies in the field of immunotherapy, which is traded at a market cap of 4.3 billion dollars. Law firm Hamburger Evron & Co. represented UroGen.