Credit crunch sinks MonoSol IPO

In a filing with the US Securities and Exchange Commission, MonoSol said it was withdrawing the IPO, originally announced in May 2007, " as terms currently obtainable in the public marketplace are not sufficiently attractive to warrant proceeding with such an offering ".

The company may try to raise funds through a private offering instead, it added.

MonoSol was expecting net proceeds of around $60.3 million from the sale of 4 million shares of common stock, based on an assumed median price of $17 per share.

If the underwriters had exercised their overallotment option in full, the net proceeds would have been about $69.8m.

The company had intended to use the money for continued development of prescription and over-the-counter (OTC) products using its proprietary thin-film technology, as well as for capital expenditures, working capital and other general corporate purposes.

Specifically, around $19.5m had been earmarked for developing thin-film versions of existing drugs and other self-funded initiatives, including product development, clinical trials and any necessary regulatory submissions.

A further $25.3m was slated for capital expenditures, including retrofitting of the Ameriplex facility, leased by MonoSol in Portage, Indiana under an October 2006 agreement, to create a current Good Manufacturing Practices (cGMP) plant for the development and manufacture of dissolving thin film.

The remaining $15.5m was for working capital and general purposes, including potential acquisitions of " businesses, products or technologies that are complementary to our current or future business and product lines ".

The self-funded initiatives mentioned above refer to thin-film versions of existing blockbuster prescription medicines whose patents have either expired or are approaching the end of their term.

These projects involve the sleeping aid Ambien (zolpidem tartrate, Sanofi Aventis), the anti-emetic Zofran (ondansetron hydrochloride, GlaxoSmithKline), the Alzheimer's Disease treatment Aricept (donepezil, Eisai/Pfizer) and the antidepressant Lexapro (escitalopram oxalate, Forest Laboratories).

MonoSol's thin-film version of Ambien is currently in a pilot clinical study to establish bioavailability/bioequivalence to the reference drug, while the Zofran formulation successfully completed a pilot clinical trial in February.

The company's versions of Aricept and Lexapro are in preclinical development, with clinical trials expected to start this year.

MonoSol also has disclosed partnerships for the development of thin-film prescription drugs with UMD (ketorolac in menstrual pain) and Adams Respiratory Therapeutics (multiple respiratory therapies), as well as with a number of companies for OTC pharmaceutical and other products, some of which are on the market.

Branded as PharmFilm, MonoSol's Orally Dissolving Films (ODFs) are already used in breath-freshening strips (TheraBreath) and in OTC medicines containing the cough suppressant dextromethorphan and the cough/cold remedy diphenhydramine citrate.

According to the company, the PharmaFilm technology offers a convenient, portable, easily administered and pleasant-tasting dosage form that improves patient compliance.

ODFs have been shown to disintegrate faster than existing quick-dissolve technologies, and with less fragility, MonoSol says.

High drug loads can be achieved with proprietary taste-masking techniques while " easily " maintaining drug content uniformity.

Moreover, ODFs have a number of cost advantages in high-volume production and are particularly amenable to Process Analytical Technologies, the company claims.

Other cited benefits include unit-dose packaging and distribution, avoidance of spills (e.g., as a replacement for paediatric suspensions), rapid development and scale-up timelines, and an all-aqueous manufacturing process.

The Financial Times recently noted that only 24 IPOs have been priced so far in the US this year, the lowest level for the first quarter since 2003.

A total of 67 US IPOs came to market in the first quarter of 2007.