SafeRX Pharmaceuticals

Early Stage

Invest in a solution to this crisis.

Analytics

Platform

Dalmore Group

Start Date

09/30/2021

Close Date

04/30/2022

Min. Goal

$25,000

Max. Goal

$5,000,000

Min. Investment

$500

Security Type

Equity - Common

Funding Type

RegCF

Series

Seed

Pre-Money Valuation

$46,630,282

Location

Lenox, Massachusetts

Industry

Healthcare & Pharmaceuticals

Tech Sector

HealthTech

Distribution Model

B2B2C

Margin

Medium

Capital Intensity

High

Business Type

Growth

SafeRX Pharmaceuticals, with a valuation of $46.6 million, is raising funds on Dalmore Group. The company has patented a specific class of alcohol-resistant opioids that have the potential to prevent deaths caused by prescription overdose. The products of SafeRX Pharmaceuticals contain a combination of an FDA-approved opioid, an FDA-approved ALDI, and a tamper-resistant formulation. Michael Presti founded SafeRX Pharmaceuticals in May 2021. The current crowdfunding campaign has a minimum target of $25,000 and a maximum target of $5,000,000. The campaign proceeds will be used for formulation development, clinical conduct, clinical study initiation, and clinical trials materials manufacturing.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$0

$0

COGS

$0

$0

Tax

$0

$0

 

 

Net Income

$-822,403

$0

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$175,149

$0

Accounts Receivable

$0

$0

Total Assets

$175,149

$0

Short-Term Debt

$817,551

$0

Long-Term Debt

$0

$0

Total Liabilities

$817,551

$0

Financials as of: 09/30/2021
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Ratings KingsCrowd Startup Rating Methodology Article

Analyst Report Analyst Report Methodology Article

Synopsis

Opioids are a class of drugs that can be used to relieve pain after surgery or chronic pain. However, these drugs are highly addictive and can be fatal when used incorrectly. Since 1999, opioid-related deaths in the US have increased by more than six times.

Consuming alcohol with opioids can be even more dangerous. One study concluded that mixing the two increased risk of breathing complications, such as temporary breathing cessation. More than 50% of Americans who misused opioid drugs have also engaged in binge drinking, indicating this health risk extends to a surprisingly high population. Beyond health, opioid misuse is also expensive, costing the US more than $1 trillion between 2001 and 2017.

In the light of these issues, SafeRX is developing a new class of alcohol-resistant opioids. The medication combines prescription opioids with an alcohol-deterrent compound that gives the patient negative side effects if they consume alcohol. Moreover, the opioids and the alcohol deterrent are difficult to separate, which decreases the likelihood of tampering. SafeRX is one of the first companies to combine opioids and alcohol deterrents together in one pill. The company has patented its technology and is seeking full FDA approval.

SafeRX’s current independent raise has been rated a Neutral Deal by the KingsCrowd Investment team.

Price

SafeRX has a pre-money valuation of $46.6 million. The company is still developing its products and has not generated any revenue. Although pharmaceutical companies often have higher valuations than other industries in general, SafeRX’s high valuation is still not justifiable. This valuation is also high in comparison to other early stage startups currently raising capital online. Therefore, SafeRX is overvalued in this funding round.

Market

SafeRX is targeting opioid patients that have a high risk of consuming alcohol alongside their prescriptions. As of 2021, the global opioid market is valued at about $20.4 billion with an annual growth rate of 3.2% from 2019 to 2026. While the opioid market is fairly sizable, it is growing at a minimal rate. However, global alcohol consumption and binge drinking has increased by 70% from 1999 to 2017. A third of Americans who drink alcohol can be considered to have an alcohol addiction, and mixing drugs with alcohol can increase the likelihood of alcoholism. SafeRX could find a particularly receptive consumer base among this population.

 Around one in 10 American adults suffer from chronic pain, and 16% to 25% of chronic pain patients under treatments are alcohol dependent or binge drinkers. Since SafeRX intends to sell its medication at $237 per prescription, the company faces a market opportunity of about $2.3 billion in the US.

However, opioid prescriptions in the US have decreased by 44.4% in the past decade. The opioid market is highly regulated, increasing the complexities and risks SafeRX will need to address. In fact, the FDA has the authority to ask any pharmaceutical company to cease manufacturing drugs. With slowed growth in the opioid market and a highly niche target audience, the market potential of SafeRX looks to be limited.

Team

SafeRX is led by founder and CEO Dr. Michael Presti alongside CPO Ray Sison. Dr. Presti is a neurologist from the University of Florida College of Medicine. Prior to founding SafeRX in 2019, Dr. Presti practiced medicine for more than 10 years. From his medical profile and LinkedIn profile, it seems his medical practice was focused mostly on sleep and sleep medicine. Dr. Presti’s medical expertise is very important for a pharmaceutical startup like SafeRX. However, he lacks managerial and executive skills, which is crucial for any company. 

Chief Product Officer Ray Sison holds an MS degree in industrial pharmacy from Long Island University. Sison has more than 20 years of experience in managing pharmaceutical companies. Prior to joining SafeRX, he was the founder of Dionis Pharma, where he led efforts to develop and commercialize pharmaceutical drug products. Despite Sison’s rich experience, he works full-time in another company and does not seem completely dedicated to SafeRX. 

SafeRX also has a set of board members with significant medical and entrepreneurial experience. However, the CEO and CPO are the only current team members at SafeRX. This is a small team for a company that needs a lot of testing, research, and development. SafeRX needs to expand and possibly add roles for marketing, legal and compliance, and research and development. While Dr. Presti and Sison bring useful and complementary skill sets, they will certainly need additional team members in order to continue growing SafeRX.

Differentiators

Although neither opioid drugs nor alcohol deterrent medications are new concepts, SafeRX’s idea of combining both into alcohol-resistant opioids (AROs) is new. Even if patients are prescribed a separate alcohol deterrent to take alongside an opioid prescription, there is no guarantee patients will take them together as instructed. By combining the two medications into one, SafeRX’s new AROs can improve and even save lives. If patients consume alcohol with their prescribed ARO, they will experience negative reactions such as dizziness, vomiting, and headaches. These effects are meant to discourage and prevent patients from drinking alcohol any further while on their medication. 

SafeRX has multiple patents for its AROs, and more patents are pending. The company has strong defensibility and appears to be a first-mover in its market. Overall, SafeRX’s solution is not completely innovative, but it acts as a simple solution for a potentially deadly problem.

Performance

SafeRX has developed two alcohol-resistant opioid (ARO) products, OxARO and MethARO. What mainly differentiates SafeRX from other pharmaceutical companies developing new classes of drugs is that the chemical components in its AROs are already FDA approved. According to SafeRX, ARO treatment also qualifies for FDA Priority Review, which is when the FDA reviews a drug and takes action in no more than six months. This accelerated timeline will help SafeRX’s products enter the market sooner.

Because SafeRX’s products are still in development, the company has earned no revenue thus far. It has raised $2.7 million in the past, which is a good sign. However, as a pharmaceutical company producing and commercializing new drugs, SafeRX will need to raise more funds in the future. It is estimated that the cost of developing new drugs is $2.6 billion. As of now, SafeRX only has $175,149 in cash. The company expects to submit a New Drug Application – allowing it to sell and market its drugs – within 24 months. If SafeRX doesn’t find a way to gain capital sooner, the company could struggle to maintain its operations. At this time, there is not enough financial performance data available to truly assess the company’s business model or capital efficiency.

Risks

Investing in pharmaceutical companies developing new drugs is inherently risky and unpredictable. In 2014, the average cost of developing a new drug was $2.6 billion. Even if SafeRX reaches its maximum $5 million raise goal in this funding round, it will still need more capital for research, development, and hiring more team members. SafeRX claims that FDA approval should be fast and potentially easy because both opioids and alcohol-deterrent drugs are already FDA approved. In reality, less than 12% of drugs are approved for use by the FDA. Until SafeRX receives complete FDA approval, investors can’t be certain the company’s products will even reach the market. It is also important to mention that SafeRX go-to-market strategy is not clear and no partnerships have been made yet. All of these factors make an investment in SafeRX very risky.

Bearish Outlook

The success of SafeRX’s alcohol-resistant opioids (AROs) depends heavily on FDA approval. Without it, the products may never reach the market. FDA approval is not guaranteed since it requires going through extensive testing and regulations. It is also noteworthy that although the opioid epidemic is on the rise, most overdoses result from illicit drugs than prescription opioids. In fact, prescription opioids are declining. If prescription opioids become less common, there may not be much demand for SafeRX’s AROs.

Another factor that can decrease the growth of the opioid market is the legalization of cannabis. Cannabis can potentially be used as an alternative to opioids for chronic pain patients. If cannabis gains popularity as a way to curtail lethal opioid misuse, it could seem less risky than AROs. Finally, the SafeRX team lacks a lot of key members necessary to develop and sell its medications. The company needs to add roles for research and development, marketing, and legal and compliance. Taking all these factors in consideration, the potential of SafeRX could be limited.

Bullish Outlook

SafeRX’s technology is a simple solution for misusing opioids and alcohol together. The company seems to be the first to develop alcohol-resistant opioids (AROs). SafeRX aims to reduce the risk of combining alcohol with opioids. The company’s AROs are patented, providing defensibility and making it harder for other competitors to replicate SafeRX’s products.

Although cannabis can act as an alternative to opioids, its adoption as a medical treatment is likely to be slow. Even in cases where the opioid prescription market stops growing or grows slowly, there could still be a significant market for SafeRX. Currently, it is estimated that more than one in 10 American adults suffer from chronic pain and 16% to 25% of people in chronic pain treatment have a history of alcohol dependence or binge drinking. If these individuals also receive opioid prescriptions for pain relief, SafeRX’s products could save their lives. It is also worth mentioning that the company’s board of advisory is highly knowledgeable, which can guide it through marketing and exit plans.

Executive Summary

SafeRX Pharmaceuticals is developing a patented alcohol-resistant opioids (AROs) technology that helps prevent patients from consuming opioids and alcohol together. With this product, SafeRX has a first-mover advantage. It appears to be the first pharmaceutical company combining two FDA-approved drugs into one medication: opioids and alcohol-deterrent drugs. 

SafeRX founder and CEO Dr. Presti has more than 10 years of experience in neurology, but SafeRX lacks a well-rounded management and executive team. These skill gaps could limit SafeRX’s ability to grow or successfully bring its products to market. SafeRX is estimated to have a market opportunity of around $2.3 billion in the United States as of 2021. However, prescription opioids are becoming less common, so SafeRX could be entering the market at an inopportune time. Although SafeRX has made progress in terms of the research and development of its AROs, it still has a long way to go before being fully FDA approved. With only $175,149 on hand and no revenue, the company’s success is not guaranteed. All reasons considered, SafeRX has been rated as a Neutral Deal at this time.

For questions regarding the KingsCrowd analyst report or ratings for this company, please reach out to support@kingscrowd.com.

Analysis written by Yasmin Sharbaf, October 21, 2021.   

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SafeRX Pharmaceuticals on Dalmore Group 2021
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Platform: Dalmore Group
Security Type: Equity - Common
Valuation: $46,630,282

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