Neothetics, Inc. (NASDAQ: NEOT) is a San Diego based clinical-stage specialty pharmaceutical company that has been focused on developing therapeutics for the aesthetic market.
On Tuesday, October 17, Neothetics announced that it entered into a definitive agreement under which privately-held Evofem Biosciences will merge with a wholly-owned subsidiary of Neothetics in an all-stock transaction.
The merger will position the combined company for an opportunity to become a leading women’s health company that develops and commercializes novel products. Upon closing of the transaction, Neothetics will be renamed Evofem Biosciences, Inc., and will be under the leadership of Evofem Biosciences’ Chief Executive Officer, Saundra Pelletier. Additionally, an affiliate of Invesco Asset Management Ltd., which is an existing investor in Evofem, has agreed to purchase an additional $20 million worth of shares in the combined company.
On a pro forma basis after giving effect to both the number of shares of Neothetics common stock issued in the merger and the number of shares of Neothetics common stock issued to Invesco in the Invesco financing, current Neothetics stockholders will own approximately 13% of the combined company and current Evofem Biosciences stockholders, including Invesco, will own approximately 87% of the combined company.
The major product involved is an asset called “Amphora,” which is an on-demand non-hormonal, woman-controlled, surfactant-free investigational new drug being developed as a vaginal contraceptive and for the prevention of certain sexually transmitted infections. It is also designated as a Qualified Infectious Disease Product (QIDP) by the U.S. Food & Drug Administration for two separate indications: the prevention of urogenital gonorrhea infection in women, and for the reduction of reoccurrence of bacterial vaginosis.
The AMPOWER trial is a single-arm, Phase III, open-label, multicenter, study in women aged 18-35 years of the contraceptive efficacy and safety of Amphora® contraceptive vaginal gel. The trial is expected to enroll approximately 1,350 women at risk of pregnancy at over 100 centers in the United States. The primary endpoint is the contraceptive efficacy of Amphora® over seven cycles of use.
Phase 3 pivotal investigation is likely to be completed in early 2019. The management expects to submit for regulatory approval immediately after completion (with an underlying assumption that the data is positively strong). Therefore, we could see approval by the end of 2019.
Also, the company has expanded Amphora® clinical development platform with potential supplemental indications which would further strengthen its position as a cornerstone therapy in hormone-free birth control and as a preventative option for certain sexually transmitted infections.
The management believes that the strength of the leadership team, coupled with the completion of its pregnancy prevention trial, will enable Amphora® to reach significant value inflection points in the near term. Furthermore, Evofem Biosciences is well positioned to become a leading provider of women’s healthcare solutions with a much needed and genuinely differentiated offering.
NEOT shareholders would have a relatively smaller share in the new entity, but even then, the asset to which they are gaining an exposure would be much more valuable than its own asset.
On these developments, the company has run up more than 200% with strong volumes and is likely to continue appreciating over the near to medium term. In fact, despite this recent run, traders and investors still pricing NEOT positively. The stock currently has an average rating of “BUY” and a consensus price target of $3.00 Considering present valuation, NEOT is at an extremely favorable risk-reward position.
About Neothetics, Inc: Neothetics is a San Diego based clinical-stage specialty pharmaceutical company that has been focused on developing therapeutics for the aesthetic market.
Evofem Biosciences, Inc. Evofem Biosciences develops and anticipates commercializing innovative products that support and promote women as the primary healthcare consumer. Evofem Biosciences is currently identifying and developing new and novel products that specifically address unmet needs in the areas of sexual and reproductive health, the prevention of acquisition of sexually transmitted infections and products that address or promote general health and wellbeing.
Management and Organization: Following the merger, Saundra Pelletier will lead the company as Chief Executive Officer. The board of directors of the combined company is anticipated to be comprised of seven representatives, one of whom will be designated by Neothetics and the remaining six of whom will be designated by Evofem Biosciences, including, Ms. Pelletier and Mr. Lynch, Evofem Biosciences’ Chairman.
Second quarter financial results:
Research and development expenses for the second quarter of 2017 were approximately $1.6 million, compared to $1.4 million for the same quarter in 2016.
Net loss for the second quarter of 2017 was $2.8 million, or $0.20 basic and diluted net loss per share, compared to a net loss of $2.7 million, or $0.19 basic and diluted net loss per share, for the same period in 2016.
Cash and cash equivalents were $7.6 million as of June 30, 2017 compared to $11.5 million as of December 31, 2016.
The Company continues to streamline its operations to preserve its capital and cash resources, including implementing a reduction in the Company’s workforce from six employees to two employees.
Key risk factors and potential stock drivers:
The company´s Phase 3 pivotal investigation is an extremely important near-term catalyst.
The collaboration with Evofem Biosciences is considered as an extremely favorable milestone.
As a result of the latest transaction, overall liquidity and financial flexibility are more than high enough to carry through to trial completion, eliminating any near-term dilution risk.
Pharma space is a high-risk sector due to uncertainties associated with the novel drug development. Therefore, favorable outcome of the upcoming catalyst is necessary for the stock to retain its momentum.
Any adversities related with the same could upset the stock performance significantly.
On Monday, October 23rd, 2017, NEOT is trading at $1.24 on an above average volume of 3.47 million shares exchanging hands. Market capitalization is $17.15 million. The current RSI is 65.31
In the past 52 weeks, shares of NEOT have traded as low as $0.30 and as high as 2.63
At $1.24, shares of NEOT are trading significantly above its 50-day moving average (MA) at $0.47 and above its 200-day MA at $1.23
The present support and resistance levels for the stock are at $1.12 & $1.42 respectively.
Traders News Source is a wholly owned subsidiary of Traders News Source LLC, herein referred to as TNS LLC.
Traders News Source has not been compensated for this report by anyone and the opinions if any are that of the author Vikas Agrawal, CFA. Author’s Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I, wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in the article.
This web site, published by TNS LLC, and is an investment newsletter that is built on the premise of assisting individual investors in learning about investing. Our goal as publishers of financial information is to provide research and analysis of investments to our subscribers. TNS LLC does not give buy or sell recommendations. We do purchase distribution rights from analyst, financial writers and bloggers for a fee that may be licensed to issue price targets and recommendations. Furthermore, we encourage you to speak to a licensed professional prior to making an investment in any type of publicly traded security.
We do sell advertising to other companies including brokerage firms, web sites, publicly traded issuers, investor relations firms, and investment publications, among others. TNS LLC makes no warranty as to the policies of these organizations, and in no way endorses their offers, services, or the content of their advertisements.
When an advertiser is a publicly traded company or a third party acting on behalf of a public company, we fully disclose all compensation in the email advertisement. Such disclosure is included in a disclosure statement in each of the advertisements sent via email.
Our reports/releases are a commercial advertisement and are for general information purposes ONLY. We are engaged in the business of marketing and advertising companies for monetary compensation. Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. The disclaimer is to be read and fully understood before using our services, joining our site or our email/blog list as well as any social networking platforms we may use.
PLEASE NOTE WELL: TNS LLC and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever.
Release of Liability: Through use of this website viewing or using you agree to hold TNS LLC, its operator’s owners and employees harmless and to completely release them from any and all liability due to any and all loss (monetary or otherwise), damage (monetary or otherwise), or injury (monetary or otherwise) that you may incur. The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. TNS LLC encourages readers and investors to supplement the information in these reports with independent research and other professional advice. All information on featured companies is provided by the companies profiled, or is available from public sources and TNS LLC makes no representations, warranties or guarantees as to the accuracy or completeness of the disclosure by the profiled companies. None of the materials or advertisements herein constitute offers or solicitations to purchase or sell securities of the companies profiled herein and any decision to invest in any such company or other financial decisions should not be made based upon the information provide herein. Instead TNS LLC strongly urges you conduct a complete and independent investigation of the respective companies and consideration of all pertinent risks. Readers are advised to review SEC periodic reports: Forms 10-Q, 10K, Form 8-K, insider reports, Forms 3, 4, 5 Schedule 13D.
TNS LLC is compliant with the Can Spam Act of 2003. TNS LLC does not offer such advice or analysis, and TNS LLC further urges you to consult your own independent tax, business, financial and investment advisors. Investing in micro-cap and growth securities is highly speculative and carries an extremely high degree of risk. It is possible that an investor’s investment may be lost or impaired due to the speculative nature of the companies profiled.
The Private Securities Litigation Reform Act of 1995 provides investors a ‘safe harbor’ about forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be “forward looking statements”. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve several risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as “projects”, “foresee”, “expects”, “will”, “anticipates”, “estimates”, “believes”, “understands”, or that by statements indicating certain actions & quote; “may”, “could”, or “might” occur.
Understand there is no guarantee past performance will be indicative of future results. In preparing this publication, TNS LLC has relied upon information supplied by its customers, publicly available information and press releases which it believes to be reliable; however, such reliability cannot be guaranteed. Investors should not rely on the information contained in this website. Rather, investors should use the information contained in this website as a starting point for doing additional independent research on the featured companies. The advertisements in this website are believed to be reliable, however, TNS LLC and its owners, affiliates, subsidiaries, officers, directors, representatives and agents disclaim any liability as to the completeness or accuracy of the information contained in any advertisement and for any omissions of materials facts from such advertisement. TNS LLC is not responsible for any claims made by the companies advertised herein, nor is TNS LLC responsible for any other promotional firm, its program or its structure.