EOM Pharmaceutical Files For $25 Million IPO Uplisting To Nasdaq (EOM)

A Quick Take On EOM Pharmaceutical

EOM Pharmaceutical (EOM) (ImmunoCellular Therapeutics, Ltd.) has filed to raise $25 million in an IPO of its common stock, according to an S-1 registration statement.

The firm is a clinical-stage biopharma developing treatments for various inflammatory conditions and ocular diseases.

I’ll provide an update when we learn more information about the IPO.

EOM Overview

Montvale, New Jersey-based EOM was founded to develop a pipeline of immunomodulators and eye treatments for various serious health conditions.

Management is headed by Chief Executive Officer Irach B. Taraporewala, Ph.D., who has been with the firm since inception in December 2021 and was previously a managing member of Sitara Pharmaceutical Consulting and was founder/CEO of Ohr Pharmaceutical.

The firm’s lead candidate, EOM613, is being tested to counteract the inflammatory effects of viruses following infection and from cancer cachexia; it is in Phase 1/2 trials in Brazil for COVID-19 treatment.

Below is the current status of the company’s drug development pipeline:

EOM has booked fair market value investment of $5.9 million in convertible debt and equity as of March 31, 2022 from investors including Moses Goldberger, Gold Equity Group, and Rashbi Capital Group.

EOM’s Market & Competition

According to a 2016 market research report by Grand View Research, the global market for immunomodulators was an estimated $131.7 billion in 2015 and is forecast to reach $231 billion by 2025.

This represents a forecast CAGR (Compound Annual Growth Rate) of 5.8% from 2016 to 2025.

Key elements driving this expected growth are an increasing incidence of chronic diseases, including cancer, asthma, allergic conditions, and multiple sclerosis.

Also, below is a chart showing the historical and projected future growth of the U.S. immunomodulator market by type:

The firm also has product candidates for the treatment of ocular diseases such as Wet AMD, Diabetic Retinopathy, and others; these diseases represent potentially quite large market size opportunities.

Major competitive vendors that provide or are developing related treatments include:

• Acacia Pharmaceuticals

• Endevica Bio

• Pfizer (PFE)

• Novartis (NVS)

• Bristol-Myers Squibb (BMY)

• Gilead Sciences (GILD)

• AbbVie (ABBV)

• Sorrento Therapeutics (SRNE)

• Others

EOM Pharmaceutical’s Financial Status

The firm’s recent financial results are typical of a clinical-stage biopharma firm in that they feature no revenue and material R&D and G&A expenses from its drug candidate development efforts.

Below are the company’s financial results inception in March 2020 to December 31, 2021:

As of March 31, 2022, the company had $933,148 in cash and $2.8 million in total liabilities.

EOM Pharmaceutical’s IPO Details

EOM intends to raise $25 million in gross proceeds from an IPO of its common stock, although the final amount may differ.

No existing shareholders have indicated an interest to purchase shares at the IPO price, although this element may become a feature of the IPO if disclosed in a future filing.

The firm’s shares are currently being quoted on the OTC Pink market under the name ImmunoCellular Therapeutics (OTC:IMUC), where its most recent trade was on June 24, 2022 in the amount of $0.30 per share. IMUC’s market capitalization as of that trade was approximately $34 million.

Management says it will use the net proceeds from the IPO as follows:

for product development activities, including pre-clinical and regulatory research and development for our product candidates and future clinical trials, and to repay approximately $625,000 (25%) of the principal on the outstanding convertible promissory note issued to one of our stockholders in the aggregate amount of approximately $2,500,000 which we have used for R&D drug development, our Brazilian clinical trial and general working capital. The convertible promissory note bears interest at a rate of 5% per annum and matures on November 24, 2023. We anticipate that the combined cost of preclinical animal studies and clinical trials for both drug candidates in the U.S and ex-U.S will be approximately $18-$20 million including manufacturing costs.

Based on our current projections, we believe the net proceeds of this offering will fund our operations for at least 12 months from the date of this prospectus.

(Source – SEC)

Management’s presentation of the company roadshow is not available.

Regarding outstanding legal proceedings, management says the firm does not have ‘any pending litigation to which we are a party or to which our property is subject that we believe to be material.’

The sole listed bookrunner of the IPO is EF Hutton.

Commentary About EOM’s IPO

EOM is seeking an uplisting to Nasdaq to fund further development of its pipeline of drug candidates.

The firm’s lead candidate, EOM613, is being tested to counteract the inflammatory effects of viruses following infection and from cancer cachexia; it is in Phase 1/2 trials in Brazil for COVID-19 treatment.

The market opportunity for immunomodulators for the treatment of cancers is extremely large and expected to grow in the years ahead as the class of drugs has proven effective against various cancer types.

The firm’s trials for its Squalamine Lactate product have produced mixed results and management intends to conduct further trials outside the U.S. for some indications of its drug candidate.

Management hasn’t disclosed any major pharma firm collaboration relationships.

The company’s investor syndicate doesn’t include any widely known institutional life science venture capital firms or major pharma strategic investors.

EF Hutton is the sole underwriter and IPOs led by the firm over the last 12-month period have generated an average return of negative (60.4%) since their IPO. This is a bottom-tier performance for all major underwriters during the period.

Notably, the IPO proceeds will likely only fund its operations for about 12 months, which means it will need to raise additional funding within 6 months of the IPO.

An equity raise so soon after the IPO may have the effect of diluting existing shareholders, as it is unlikely the company will have achieved a significant milestone that provides a catalyst to the stock price, offsetting the dilutive effects of an additional equity raise, if achieved.

When we learn more about the IPO’s pricing and valuation assumptions, I’ll provide a final opinion.