Algernon Pharma IPO: What You Need to Know

By Kirsteen Mackay

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Algernon Pharma (CSE: AGN, FRANKFURT: AGWO, OTCQB: AGNPF) plans to list on the NASDAQ Capital Market in an IPO. 

Algernon Pharmaceuticals (CSE: AGN, FRANKFURT: AGWO, OTCQB: AGNPF) filed its intention to IPO on 22 February 2022. The company plans to list on the NASDAQ stock exchange under a symbol yet to be announced.

The company has not yet disclosed the details of its IPO, such as the number of shares in the offering or the expected price per share. However, Algernon is already listed on the OTCQB under the symbol AGNPF and listed for trading on the Canadian Securities Exchange as AGN and the Frankfurt Stock Exchange as AGW.

Ladenburg Thalmann & Co., Inc. is the lead managing underwriter and sole book-runner on the offering.

Ladenburg Thalmann is a leader in financing growing middle-market public companies across various industry verticals, including Healthcare & Life Sciences, Yield-Oriented Securities (BDCs, REITs, MLPs), Energy, Power & Infrastructure, and Telecom, Media & Technology.

Drug development is hugely competitive and capital-intensive, so is this a viable investment opportunity?

What is Algernon Pharmaceuticals?

Algernon Pharmaceuticals is a clinical-stage drug development company focused on the disease areas of stroke, idiopathic pulmonary fibrosis (IPF) & chronic cough, and COVID-19.

The Algernon business model takes safe, already approved drugs, including naturally occurring compounds, screens them in globally accepted animal models for new diseases, files new intellectual property rights, and then efficiently moves them into clinical trials.

The company investigates compounds that have never been approved in the US or Europe to avoid off-label prescription writing.

Algernon Pharmaceuticals was founded in January 2015 and is headquartered in Vancouver, Canada.

When will Algernon stock go public?

There is not yet an IPO date for Algernon stock on the NASDAQ, and it has to receive approval to be listed on the NASDAQ Capital Market before the offering date is confirmed.

How does Algernon Pharma make money?

Algernon Pharmaceuticals is a research and development firm, so it doesn’t yet make money.

It hopes to make money from product sales eventually.

Drug Pipeline

Candidate

Indication

Development Stage

Upcoming Milestone

AP-188

Stroke

Phase 1

Initiate Phase 1 study in the U.K. Q4-2021

NP-120

Idiopathic Pulmonary Fibrosis & Chronic Cough

Phase 2

Final data from Q4 - 2021

NP-135 & NP 160

Non-Alcoholic Steatohepatitis (NASH)

Preclinical

 

NP-135, NP-160 & NP-251

Chronic Kidney Disease

Preclinical

 

NP-120 & NP-178

Inflammatory Bowel Disease

Preclinical

 

NP 120

Pancreatic Cancer

Preclinical

 

NP 120

Small Cell Lung Cancer

Preclinical

 

Some of the drugs in Algernon Pharma’s Clinical Pipeline have a controversial background, but the hope is that they will be repurposed for good use.

The drug compound AP-188 is the psychedelic compound DMT. Algernon Pharma is exploring this drug candidate as a potential treatment for stroke.

DMT is part of the tryptamine family, which includes psilocybin and psilocin. It’s a substance that’s often discussed on the Joe Rogan Experience. DMT occurs naturally in many plant species and animals and has been used in religious ceremonies as traditional spiritual medicine by indigenous people in the Amazonian basin. DMT can also be synthesized in a laboratory.

NP-135, also known as Bemethyl, and NP-160, also known as Bromantane, are drugs on the World Anti-Doping Agency watchlist. They’ve been used to improve athletic performance, and now Algernon Pharma is looking at their potential in treating non-alcoholic Steatohepatitis and Chronic Kidney Disease.

Algernon's business objective is to fast-track a number of its lead compounds into phase II clinical trials as quickly and as inexpensively as possible.

Repirinast

Algernon was recently awarded a contract to Zhejiang Ausun Pharmaceutical Co, Ltd of China to begin manufacturing a supply of its repurposed drug candidate NP-251 (Repirinast). Using this clinical candidate, the company has initiated a new chronic kidney disease (CKD) research program.

Repirinast was originally developed by Mitsubishi Tanabe Pharma and marketed in Japan for over 25 years under the brand name Romet™ for the treatment of asthma. Mitsubishi discontinued the drug in 2013. 

Christopher J. Moreau, CEO of Algernon, said:

“The pre-clinical data is showing that Repirinast may represent a promising new potential therapy and we look forward to advancing it as quickly as possible into human trials.”

Financials:

For the nine-month period ended May 31, 2021, Algernon Pharmaceuticals recorded a net loss of $7.4m. It didn’t generate any revenue.

Year ended August 31, 2020

Year ended August 31, 2019

Year ended August 31, 2018

Nine Months Ended May 31, 2021

Three Months Ended May 31, 2021

Revenue

$Nil

$Nil

$Nil

$Nil

$Nil

Net Loss

$8,538,207

$1,895,563

$937,594

$7,493,813

$1,673,993

Comprehensive Loss

$8,554,912

$1,897,621

$929,840

$7,561,758

$1,756,641

Loss per Common Share - Basic and Fully Diluted

$0.10

$0.04

$0.03

$0.05

$0.01

Source: FactSet financial data and analytics.

Why is Algernon stock going public?

Algernon Pharmaceuticals is going public on the NASDAQ to raise cash and bring the investment opportunity to a wider pool of retail investors.

Use of Proceeds

Algernon Pharmaceuticals intends to use the money raised to cover two years of general and admin expenses. It also wants to progress its clinical candidates through drug trials. This includes bringing Ifenprodil to Phase II trials for Pancreatic Cancer, Small Cell Lung Cancer, IPF or Chronic Cough, and DMT Preclinical Phase II trial for Strokes.

Algernon IPO Lock-up period

Directors, officers and principal shareholders have agreed to a lock-up period during which they will not sell, transfer or dispose of their shares. The lock-up time frame has not yet been determined.

Growth Potential

Algernon Pharmaceuticals offers share price growth potential through the success of its clinical trials.

Risks to Investing in Algernon:

There are many risks to investing in Algernon stock. It is highly speculative, and investors should consider the following factors.

  • Regulatory risks, including psychedelic regulatory risk

  • Algernon is a development stage company with a limited history of operations.

  • Pre-clinical and clinical trials are costly and take time

Competitors

  • Intercept Pharmaceuticals (NASDAQ: ICPT)

  • Trevi Therapeutics (NASDAQ: TRVI)

Should you invest in Algernon Pharmaceuticals?

Drug development stocks are speculative so the risk/reward is relative.

The Algernon Pharmaceuticals IPO will help the company raise funds to continue its clinical trials. and Ladenburg Thalmann is an experienced underwriter leading the IPO.

Interest in psychedelics has been growing in recent years, and if DMT can be found to be useful in a medicinal capacity, it will help improve its image. The same goes with repurposing other drugs for new use.

These are some of the reasons investors might be attracted to such an investment. Nevertheless, caution is advised and investors must carry out their own due diligence before buying shares.

If you enjoyed reading this IPO overview, why not read our other IPO coverage or our in-depth reports on ESG investing and Healthcare investing. Or check out our 12 investing themes for 2022.

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In this article:

Topics:
IPO
Pharmaceuticals
Industries:
Healthcare

Author: Kirsteen Mackay

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Kirsteen Mackay does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Kirsteen Mackay has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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