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Bind Therapeutics (NASDAQ:BIND) made its public debut on Friday, September 20. Shares of the clinical-stage nanomedicine company ended their first day with losses of 6.1% at $14.09 per share.

Given the limited float, valuation and strong partnerships, shares might be worth the gamble for an opportunistic investor. I remain on the sidelines given the fact that I have difficulty valuing these businesses.

The Public Offering

Bind Therapeutics is a clinical-stage nanomedicine platform focused on the development of Accurins, which is a targeted and programmable therapeutic. Accurins is designed with physical and chemical characteristics to target cells or tissues to increase efficiency and minimize the adverse effects on healthy cells.

Bind Therapeutics sold 4.7 million shares for $15 apiece, thereby raising $70 million in gross proceeds. All shares were being sold by the company with no shares being offered by selling shareholders.

Bankers and the firm set an initial price range of $14 to $16 per share. Shares were eventually sold at the midpoint of the range.

Some 30% of the total shares were offered in the public offering. At Friday's closing price of $14.09 per share, the firm is valued at $223 million.

The major banks that brought the company public were Credit Suisse, Stifel, Cowen & Company and JMP Securities.

Valuation

Bind Therapeutics aims to leverage its medicinal nanoengineering platform to develop the pipeline of Accurins, first in oncology as well as in collaboration with other biopharmaceutical companies.

The leading drug candidate, BIND-014 is in the Phase II clinical trial for non-small cell lung cancer and metastatic castrate-resistant prostate cancer. The firm has collaborations with key partners including Amgen (NASDAQ:AMGN), Pfizer (NYSE:PFE) and AstraZeneca (NYSE:AZN) to develop Accurins. The company stands to receive up to $1 billion in upfront and milestone payments, including $450 million in pre-commercial payments.

For the full year of 2012, Bind Therapeutics generated revenues of merely $1.0 million, similar to last year. Net losses widened from $19.8 million to $24.2 million in the meantime.

Revenues for the first six months of 2013 roughly ten-folded to $4.3 million. Net losses widened to $15.0 million in the meantime.

Bind Therapeutics operates with $21.3 million in cash and equivalents. The company operates with $4.2 million in total long-term debt. Factoring in the gross proceeds of $70 million, Bind operates with a net cash position of around $75 million.

As such, Bind Therapeutics' operating assets are valued around $150 million, the equivalent of perhaps 15 times this year's annual revenues of around $10 million.

Investment Thesis

As noted above, the offering of Bind Therapeutics has been quite a disappointment. Shares were offered at the midpoint of the preliminary offering range and saw losses of 6.1% on their opening day.

Bind Therapeutics whose basic research has been pioneered at the prestigious Massachusetts Institute of Technology is focusing on cancer drugs, a hot area within the wider biopharmaceutical industry. Its main platform is Accurins, and I must admit that the company has signed up three prestigious partners so far this year, while the company has a rather limited market capitalization.

Crucial in cancer research is maximizing the therapeutic effects on the target cells, while limiting the damage to healthy cells. Accurins aims to do this by targeting diseases on three levels, the tissue, cellular and on a molecular level.

Preliminary results of BIND-014 at 45 patients have already shown superior results over Taxotere, the cancer drug developed by Sanofi-Aventis (NYSE:SNY), and has generated many billions in revenues over the past years.

A good thing is that in all three collaborations, the partners will pay for the development costs, while milestone payments allow Bind to further raise more capital. On its turn this will be used to fund further research. I haven't seen that Bind is eligible to receive royalties as a percentage of sales, which is a drawback.

So all in all, the limited float and strong partnerships are key. Total milestones of $1 billion are worth 4 times the current valuation, yet the company appears not to be eligible for royalties as a percentage of revenues, which is a drawback. Proceeds could however be used to develop own products, on which it will retain the rights.

I remain on the sidelines as I find it terribly difficult to value these kind of biopharmaceutical companies. Yet I am cautiously optimistic.

Source: Bind Therapeutics - Cancer Research IPOs Are The Hottest Things In Town