Year's number 2 IPO: Dog diarrhea biotech Jaguar Animal Health sets terms for $40 million IPO

Jaguar Animal Health, a biotech developing gastrointestinal treatments for companion and production animals, announced terms for its IPO on Tuesday. The San Francisco, CA-based company plans to raise $40 million by offering 5.0 million shares at a price range of $7 to $9. At the midpoint of the proposed range, it would command a fully diluted market value of $86 million.

Business
Jaguar Animal Health notes that diarrhea is one of the most common reasons for visits to the veterinary office. Its lead candidate is a canine-specific formulation of crofelemer, an active ingredient isolated from the South American Croton lechleri ("dragon's blood") tree. Parent Napo Pharmaceuticals markets its crofelemer drug under the name Fulyzaq, which received FDA approval in December 2012 for the treatment of diarrhea caused by HIV medication.

The company plans to first seek approval for chemotherapy-induced diarrhea (CID) in dogs with commercialization expected in 2016. If it receives approval for CID, Jaguar then hopes to expand its labeled indication to include general acute watery diarrhea.

Jaguar's drug pipeline includes a range of prescription and nonprescription products. In addition to its dog indication, it plans to seek approval for crofelemer for cats and horses. Jaguar also offers a non-prescription product meant to improve gut health in animals, which is based on extract from the same Croton lechleri tree. The company recently launched its calf version and plans to launch additional formulations for other animals in 2015.

Shareholders
Jaguar Animal Health is controlled by parent company Napo Pharmaceuticals, BioVeda China Fund and Chairman James Bochnowski. Jaguar's CEO, Lisa Conte, previously served as Napo's founder and CEO for 14 years and before that was CEO of now-bankrupt predecessor Shaman Pharmaceuticals.

Pet IPOs
The microcap company's IPO launch arrives one day after another pet-focused IPO, Freshpet (FRPT), announced terms for its $135 million offering, also set for next week. The year's companion/production animal biotech, Parnell Pharmaceuticals (PARN), has fallen over 50% since its June IPO. Other recent microcap pet biotechs include Aratana Therapeutics (PETX; up 74% since June 2013) and Kindred Biosciences (KIN; up 29% since December 2013).

Jaguar Animal Health, which was founded in 2013, 2014, plans to list on the NASDAQ under the symbol JAGX. BMO Capital Markets and Guggenheim Securities are the joint bookrunners on the deal. It is expected to price during the week of November 3, 2014.