Imprimis Rising: Unique Pathway Requires Fewer and Smaller Clinical Trials

Imprimis Rising: Unique Pathway Requires Fewer and Smaller Clinical Trials 
LOS ANGELES, CA -- (Marketwired) -- 05/08/13 --  Imprimis
Pharmaceuticals, Inc. (NASDAQ: IMMY) has seen its stock rise from
about $5.25 per share in February at the time of the NASDAQ listing
to around $9 per share and is one of the best performing stocks in
the biotech industry this year. Despite this impressive move we
believe Imprimis is just getting started and is still undervalued
with a market cap of only $80 million. Imprimis' founders have put
the pieces in place for the company to become a large pharmaceutical
company in a relatively short period of time. Imprimis currently has
catalysts that will add substantial value this year and for many more
years to follow.  
Imprimis was founded in 2011 when Mark L. Baum, CEO and Co-Founder
rescued the predecessor company, Transdel Pharmaceuticals, from
Chapter 11 bankruptcy. Within the rescue were two assets, Accudel, a
topical drug delivery platform and Impracor, a ketoprofen-based
topical drug based on the Accudel delivery technology. From there Mr.
Baum and Robert J. Kammer, Chairman of the Board and Co-Founder
restructured the company and added strategic relationships, a strong
management team and world class medical development and advisory
teams that already have proven valuable to the company.  
Today Imprimis is a unique pharmaceutical company focused on bringing
drug candidates to market exclusively through the FDA's 505(b)(2)
pathway. Furthermore, Imprimis has approximately $19 million in cash,
based on the closing of its most recent financing, exclusive access
to a library of over 10,000 drug formulations, most of which qualify
for the 505(b)(2) pathway, and a large market drug entering its Phase
III clinical trial. Mr. Baum and his team have positioned Imprimis
for near-term and long-term success. 
FDA 505(b)(2) Pathway 
The 505(b)(2) pathway to FDA drug approval differs greatly from the
normally utilized 505(b)(1) approval pathway. The 505(b)(1) pathway,
generally used for new chemical entities, generally requires
pre-clinical trials, Phase I, Phase II and Phase III clinical trials
that are extremely expensive and take many years to complete and
carries a high risk of failure. 505(b)(2) is a path to FDA approval
for new
 drug formulations of previously approved products. 505(b)(2)
is a New Drug Application (NDA) that contains full safety and
efficacy reports from clinical trials, but allows, "at least some of
the information required for approval comes from studies not
conducted by or for the applicant and for which the applicant has not
obtained a right of reference," The Center for Drug Evaluation and
Research, at the FDA, states. The 505(b)(2) pathway usually requires
fewer and smaller clinical trials greatly reducing the time from
development to FDA approval and substantially mitigating costs. After
approval the FDA may grant the 505(b)(2) product developers product
exclusivity for 3 to 7 years.  
PCCA Relationship/Drug Discovery Platform 
In August of 2012 Imprimis formed an exclusive development alliance
with Professional Compounding Centers of America (PCCA). At that time
PCCA invested $4 million in Imprimis at $4.80/share and now owns 9.4%
of the company. With over 3,900 member pharmacies, PCCA is the
largest supplier to the compounding pharmacy industry in North
America. PCCA supplies chemicals and other mission critical supplies
to compounding pharmacies and has a staff of over 30 pharmacists,
chemists and Ph.D.s who develop drug formulations and teach
compounders how to make these formulations. PCCA has compiled a
library of more than 10,000 compounded drug formulations. Through
their exclusive relationship, Imprimis has right of first refusal on
the commercial development of any of the prescription drug product
opportunities from PCCA.  
In addition to compiling the drug formulation library, PCCA has
compiled a database of market needs on their formulations through
information gathered by its support center which receives over
100,000 calls a year from PCCA members. Empirical data is collected
regarding these formulation efficacy and users of these formulations;
this data provides insights regarding the market need for the
formulation, as well as patient and prescriber clinical experience
with the formulation. This is an important part of the relationship,
as Imprimis will have anecdotal information about the formulation's
efficacy, side effects, and the market need for these drugs from a
group of people who actually use the product prior to Imprimis making
a decision to pursue commercialization of a formulation target.  
Imprimis has prepared a protocol to evaluate the drug candidates in
PCCA's library to determine which candidates it should bring to
market first. The formulations and data provided by PCCA give
Imprimis a unique advantage over traditional pharmaceutical companies
and greatly reduces the risk and cost of drug development.
Additionally, since the drug targets use previously approved drugs in
the formulations, Imprimis utilizes the 505(b)(2) pathway to achieve
faster and lower cost FDA approvals. The value of this relationship
is nearly priceless when it is understood that the formulation
library could yield several large market drugs in the next few years.
Imprimis expects to finalize the first product development candidates
from PCCA's library in the 3rd quarter of 2013.  
Accudel Drug Delivery Platform 
Accudel is a cream that carries drugs through the skin allowing the
drug to penetrate to the problem site. Accudel can accommodate large
and small molecule drugs for topical delivery. The cream quickly
absorbs, has a neutral smell and is aesthetically pleasing. Accudel
has shown that it delivers a majority of the drug for release within
4 hours in tests using ketoprofen. Accudel is a large part of
Imprimis' business plan as a delivery vehicle for current FDA
approved drugs and utilizing the PCCA library.  
Imprimis' lead drug candidate is Impracor. Impracor utilizes the
company's patented Accudel topical cream technology for topical
delivery of ketoprofen, a non-steroidal anti-inflammatory drug
(NSAID), for sprains strains and joint pain. Imprimis expects to
begin enrolling patients in the Phase III trial in the 3rd quarter of
2013, which could lead to an FDA PDUFA date in the 4th quarter of
2014. If approved, Impracor would be the first FDA approved topical
ketoprofen product and the first topical COX-1 API in the United
States. Impracor could realign the NSAID marketplace in the U.S. from
an oral dominated market towards a topical delivery market similar to
trends in Europe. In Europe 60% of the topical NSAID market is
ketoprofen-based, and ketoprofen is the only topical NSAID authorized
for the treatment of acute lower back pain in Europe. 
Imprimis' predecessor company conducted a Phase III trial for
Impracor, which failed and ultimately led to the company's
bankruptcy. Mr. Baum and his team looked closely at the results and
determined there were mistakes in the design and management of the
trial. One example was that patients in the trial were not screened
for recreational drug use, which can interfere with the results of
the trial statically powering and evaluating a pain drug trial. Out
of the 361 trial participants, 30 tested positive for recreational
drugs negatively skewing the trial results. According to Mr. Baum, if
those 30 participants had been excluded, the trial would have
achieved statistical significance. The in-depth analysis conducted b
the new management gave them confidence they have a strong chance of
getting Impracor FDA approved with two stringently controlled Phase
III clinical trials.  
In 2009 the global NSAID market was over $9 billion according to the
Archives of Internal Medicine. More than 60 million people in the
U.S., of which 70% are over the age of 65, are regularly taking
NSAIDs. The market for topical NSAIDs is growing rapidly with only a
handful of products available (Voltaren Gel, Pennsaid, Flector Patch,
Solaraze). The FDA approved the first of the topical NSAID products
in 2007, so this is a new class of drugs in the U.S. All of the
current topical NSAID products are diclofenac based and all have
their own issues. Voltaren Gel is the most prescribed product of this
group with about 75% of the U.S. topical market. The issue with
Voltaren Gel is that it is greasy, has a strong smell and requires
the user to apply 4 grams of the Gel to the affected body part 4
times per day. We believe Voltaren does not provide users with a
positive experience. Impracor is a cream based product that absorbs
nicely into the skin, has a neutral smell and an easier dosage
regimen. The article "Topical NSAIDs for Acute Pain in Adults" by
Massey, T., Derry, S., Moore, R.A., McQuay, H.J., states; "studies of
both ketoprofen and diclofenac the proportion of participants
experiencing successful treatment with topical ketoprofen in seven
clinical studies was 73% (251/346, range 57% to 89%), while the
proportion of participants experiencing successful treatment with
topical diclofenac in three clinical studies was 52% (166/319, range
39% to 92%)." This shows ketoprofen may have better effectiveness
than diclofenac for treating acute pain.  
NSAIDs are widely used for their analgesic and anti-inflammatory
effects making them a necessary choice for pain management. Oral
NSAIDs have well documented adverse effects including liver and
kidney injury, as well as, cardiovascular events and potentially
severe gastrointestinal problems according to the article "An
Evidence-Based Update on Non-steroidal Anti-Inflammatory Drugs"
( According to
the American Journal of Medicine oral NSAIDs are responsible for over
100,000 gastrointestinal bleeding hospitalizations and more than
16,000 deaths per year leading to hospitalization costs of $2 billion
a year. Topical delivery of NSAIDs addresses the many health related
concerns of orally administered NSAIDs.  
There are several risks for investors to be aware of in considering
an investment in Imprimis. First, as with all drug development
companies, there is inherent risk in drug discovery, the clinical
trials and gaining FDA approval. Although Imprimis has mitigated much
of this risk through their relationship with PCCA and the experience
of its development team, there is always the possibility one of their
chosen targets does not receive FDA approval. Another risk that could
significantly damage the company is if they lose their partnership
with PCCA. We do not foresee this occurring as PCCA has a significant
investment and has a strong relationship with Imprimis, including the
service of a senior PCCA employee and shareholder on the Imprimis
Board of Directors.  
Since Imprimis is a relatively new company, we do not think it has
been fully valued by the market. When looking at similar companies in
Imprimis' market, Imprimis is not far behind the pace of others. For
example, AcelRX Pharmaceuticals, Inc. is a company that focuses on
acute pain therapies, has a product in phase III, one in Phase II and
several products behind them, is valued at a market cap of around
$216 million with about $60 million in cash. If we back out the cash
the value of ACRX is about $156 million. Another company to look at
is Pain Therapeutics Inc., a company that has a lead candidate called
REMOXY, which is in Phase III trials. PTIE has a $400 million
alliance with Pfizer, Inc. to develop and commercialize REMOXY and
three other abuse-deterrent opioid painkillers. REMOXY is in Phase
III and they have two other candidates in Phase I. PTIE has a market
cap of nearly $200 million and cash of $54 million according to YAHOO
Finance. If we back out the cash the value of PTIE is about $146
million. Imprimis has a market cap of about $79 million as of the
market close on May 2, 2013 and about $19 million of cash, so the
non-cash value of Imprimis is about $60 million. As Imprimis begins
their Phase III clinical trial in the third quarter and identifies
their first new drug candidates from the PCCA library, also in the
third quarter, Imprimis should see their valuation increase to closer
to the comps non-cash values of about $150 million. This would
suggest 150% growth in the stock price over the next 12 months is not
out of the question for Imprimis.  
Imprimis has put in place a strong management team, a Phase III large
market drug candidate and a platform with a library of 10,000 drug
formulations to quickly and cost effectively bring new drugs to
market. Imprimis will not just have 3 or 4 drugs in their pipeline,
in a few of years they could have 10 to 15 identified drug
candidates. Imprimis could also out-license several of these
candidates for development to further utilize the PCCA library, which
could bring in significant upfront licensing fees, which in turn,
could be used to fund internally developed formulations. Imprimis has
been built to achieve success quickly and their valuation does not
yet tell the full story of this company. Imprimis has been a big
mover this year, but the company is just getting started and there
should be plenty of upside for current and new investors.  
Disclosure: None 
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