iX Biopharma

iX Biopharma: (S$0.57) Getting hard on its painkillers
Specialty pharmaceutical firm iX Biopharma surged to a high of $0.64, 39% above its IPO price of $0.46 on its listing debut on SGX Catalist Board.

The offer of 65.5m new shares (64.5m placement and 1m public offer), representing 11.1% of enlarged share capital, was 1.4x subscribed.

Substantial shareholders include Yeo Chung San (6.6m), prominent investor Alan Wang’s Asdew Acquisitions (4m) and orthopedist Ang Kian Chuan (3.9m). There are also a number of pre-IPO investors who participated at between 6.7¢ and 12.5¢, with some not subject to moratorium.

iX Biopharma specialises in the development and commercialisation of pharmaceutical therapies for pain management and male erectile dysfunction.

The group currently has three drugs under development – Wafermine, Wafernyl and PheoniX, and operates an integrated business model encompassing drug development, manufacturing and supply.

Net proceeds of $27.6m from the IPO will mainly be used to fund clinical trials for product development.

Upon successful outcomes of the trials, iX Biopharma intends to apply for marketing and commercialisation approval of the products in the US. The group also plans to register its products for commercialisation in other markets where viable.

However, investors should note that iX remains a conceptual and highly speculative stock, given that:
1) Its drugs are still under development and have not achieved commercial viability
2) The company is loss-making and constantly draining cash at an annual burn rate of $1-2.1m
3) The stock is priced at a massive 28x premium to book value of $11.9m, including accumulated losses of $13.7m and $2.9m of intangible assets

In addition, eyebrows have been raised over CEO Eddy Lee's generous remuneration in FY14-15 despite iX’s mounting losses. Lee has no medical training and has more experience running casinos, including Burswood in Perth.