LTR Pharma (ASX:LTP): Why has it been one of the hottest ASX IPOs in the last 2 years?

Nick Sundich, January 4, 2024

LTR Pharma (ASX:LTP) has not even been listed on the ASX for a month, yet it is one of the hottest IPOs in the last 2 years – at least excluding resources stocks. It is trading at a premium of over 60% to its IPO price – very impressive. Is this a sign that better times will happen in the IPO market in 2024? Is there something behind this company that justifies its post-IPO performance? Maybe both of those questions deserve an affirmative answer.

All about LTR Pharma

LTR Pharma is a pharmaceutical company developing an instranasal spray treatment for Erectile Dysfunction, known as Spontan. Spontan works as a PDE5 inhibitor, bypassing first-pass metabolism associated with many oral PDE5 medications.

PDE5 an enzyme in the walls of blood vessels. It affects blood flow and how cells signal within the body. PDE5 inhibitors block the PDE5 enzyme to prevent it from working. This inhibition relaxes the blood vessels and increases blood flow

Spontan is not yet on the market, although there are other PDE5 inhibitors on the market. And as a consequence, LTR Pharma is planning a quicker path to market than most other companies seeking approval, aiming to file for approval in Australia and the US within 1-2 years.

It is anticipating undertaking a bio-equivalence study and then undertaking the FDA 505(b)(2) regulatory process. Ethics approval for the trial has already been obtained.

An opportunity for LTR Pharma?

LTR Pharma believes that there is a significant opportunity in the ED market, pointing to Frost & Sullivan data estimating that the market would reach US$5.9bn by the end of 2028 and that over 300 million males would be affected by it.

‘With a unique competitive advantage, and consumer demand clearly warranting new and innovative treatments in this market category, LTR Pharma is strongly positioned to capitalise on the rapidly growing demand for effective and rapid ED treatments,’ LTR Chairman Lee Rodne told investors last month.

Clearly, investors believe there is the opportunity and that the company is well placed to capitalise. So much so, that they would trust a new IPO even in spite of the horrible couple of years it has been for investors taking their chances with new listings.

And a (potential) good luck charm for IPO investors?

Investors who are not shareholders of LTR Pharma may have reason to be optimistic that 2024 will be a better year for the IPO market than the past couple of years. There have been very slim pickings amongst non-resources IPOs, with few listings to begin with and most failing.

This was due to the bulk of small cap IPOs in 2020 and 2021 gradually crashing back to earth after positive starts, not to mention higher interest rates and inflation.

Health IPOs (and stocks more broadly) have had their worries compounded by the rise of weight loss drugs like Ozempic and the view that they could put a significant dent in their markets. After all, get rid of obesity, and you can get prevent plenty of chronic health conditions that come with obesity.

Granted, you could argue that Ozempic might be irrelevant to LTR Pharma, or perhaps even beneficial – it might instil more physiological confidence in men that otherwise wouldn’t have it, and lead them to see it expressed physically.

Whether or not that is the case, it is a good sign for the market that LTR Pharma has performed as well as it has. Only time will tell how the IPO market goes throughout the whole year, although there’s no denying that this listing does not bode well. In a similar way, investors can only sit back with their fingers crossed that things will work out, even if it has a faster path to market ahead of it in theory.