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Forward Pharma: One of Baupost’s new positions

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Feb. 10 2015, Updated 5:05 p.m. ET

Baupost adds new stake in Forward Pharma

Seth Klarman’s The Baupost Group added a 11.72% stake in Forward Pharma (FWP). A 13G filing  in November indicated that the fund owns 5,367,300 shares in Forward Pharma.

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Overview of Forward Pharma

Forward Pharma is a Danish biotechnology company focused on the immunomodulatory compound dimethyl fumarate (or DMF), referred to as FP187. The company is preparing to initiate a Phase 3 clinical trial using FP187, a proprietary formulation of DMF for the treatment of multiple sclerosis (or MS) patients.

DMF is the active pharmaceutical ingredient found in Tecfidera, which Biogen Idec, Inc. (BIIB) began selling for the treatment of relapsing remitting multiple sclerosis (or RRMS). Tecfidera generated global sales from its launch in April 2013 through June 30, 2014, of $2.08 billion. DMF is also an API found in Fumaderm, which has been sold for the treatment of psoriasis since 1994 in Germany.

Forward Pharma made its trading debut in October last year

Forward Pharma (FWP) raised $220 million through an initial public offering (or IPO) on NASDAQ in October. Reports noted that it was the largest biotech company IPO in the United States in the ten months ending October 2014.

Shares were sold at an offering price of $21.00 per ADS (American Depositary Share). A regulatory filing noted that the net proceeds will be used to pursue a Phase 3 clinical trial of FP187 for the treatment of RRMS. The stock price has gained 11% since its trading debut.

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Forward Pharma (FWP) believes that if the trial is successful, the company can submit a New Drug Application (or NDA) in the United States and a separate marketing authorization application in the European Union for FP187 to treat RRMS. It also expects to pursue the development of FP187 for the treatment of psoriasis, which includes commencing a Phase 3 clinical trial program by early 2015. The company will use part of the net proceeds to commence the remaining studies in its preclinical program.

FWP’s IPO prospectus said the company hasn’t generated any operating revenue in the absence of any commercialized products. It has also not outlicensed its clinical candidate FP187 to any third party. The costs related to research and development for the six-month period ended June 30, 2014, was $4.8 million.

Baupost’s other positions

The Baupost Group added positions in PBF Energy (PBF) and Cheniere Energy (LNG). The fund boosted its biotech portfolio with additions of Atara Biotherapeutics (ATRA), Forward Pharma (FWP), and Paratek Pharmaceuticals (PRTK). However, it disposed of a stake in Aveo Pharmaceuticals (AVEO).

The next part of this series will highlight Baupost’s stake addition in Paratek Pharmaceuticals (PRTK).

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