Foamix plans $70m offering after acne trial success

13 Sep, 2018 18:54

Foamix Pharmaceuticals intends to market its acne treatment by itself.

Foamix to attempt $70m Nasdaq offering The company’s Phase III trial of its anti-acne drug was successful. Gali Weinreb Israeli company Foamix Pharmaceuticals Ltd. (Nasdaq: FOMX) has filed a shelf registration for raising $70 million on Nasdaq. BofA Merrill Lynch, Cowen, and Barclays are acting as joint book-runners for the proposed offering. Cantor Fitzgerald & Co. is acting as lead manager.The announcement of the upcoming offering follows the company’s success in a Phase III trial of its product for treatment of acne. The report of the trial’s success was followed by a 50% leap in Foamix’s share price in preliminary trading. When trading began, however, the share price reversed direction, wiping out all but 3% of its gains, probably due to the anticipated offering. The share price is now at $6.11, giving the company a $249 million market cap.Foamix previously conducted two Phase III trials of its product, one of which achieved the expected results, while the other fell a little short of its endpoints. After consulting with the US Food and Drug Administration (FDA), the company planned another trial, which has now proved successful. Foamix believes the new results will allow the product to be registered.

If and when the product is approved for marketing, it will be the first product brought to the market by Foamix itself. The company currently has $900,000 in revenue per quarter from another product it developed, which is being marketed by Bayer.

In a conference call following publication of the trial results yesterday, the company said that although the entry of new products into the acne market was expected soon, the only products based on the minocycline antibiotic are administered orally, not on the skin, as with Foamix’s product. The company believes that it will be able to take a share of the market for anti-acne antibiotics because its side effects profile is more positive (despite the discomfort it causes on the skin, as opposed to taking it in a pill). 30% of the patients discontinued the trial; the company stated that these were expected and acceptable results.

Foamix said that it planned to submit its product for approval by the end of the year, which means that approval is likely to come in 2019. The company said that it would work during the coming year on increasing awareness of the product among doctors and insurance companies. Foamix plans to market the product by itself, rather than through a partner, and is preparing to recruit a sales staff of 50-100 for the purpose.

Foamix had $50 million in cash as of the end of the second quarter of 2018, following two offerings on Nasdaq. The company raised $40 million in the first one in 2014 at $6 a share, close to the current price, and $60 million in the second in 2015 at $9.30 a share.

During the short period from the offering until now, Foamix has undergone substantial changes. It is currently managed by a US team led by CEO David Domzalski.

The Israeli team, led by founders Dov Tamarkin and Meir Eini, is no longer dominant in Foamix’s management. They are still shareholders in the company and will benefit from any positive results. Tamarkin and Eini managed the company with few resources for years, while raising almost no external financing, with the company financing a large part of its activity through cooperation with external companies, based on its unique foam.

Foamix has burned $50 million since recruiting its US team and holding its Nasdaq offerings. The current offering, if and when it materializes, will bring the total raised by the company to $170 million. Foamix’s development activity still takes place mostly in Israel, in Rehovot.

Published by Globes [online], Israel business news – www.globes-online.com – on September 13, 2018