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Summary

  • AGTC is a clinical-stage biotechnology firm, developing treatments for severe inherited diseases of the eye.
  • AGTC plans to raise $50.0 million in its upcoming IPO, offering 3.6 million shares at an expected price range of $13-$15 per share.
  • We plan to avoid this IPO, due to AGTC products being far from commercialization, and negative press around a potential biotech bubble.

Applied Genetic Technologies Corp (NASDAQ:AGTC), a clinical-stage biotechnology firm, developing treatments for severe inherited diseases of the eye, plans to raise $50.0 million in its upcoming IPO.

The Alachua, Florida-based firm will offer 3.6 million shares at an expected price range of $13-$15 per share. If the IPO can hit the midpoint of that range at $14 per share, AGTC will command a market value of $188 million.

AGTC filed on January 10, 2014.
Lead Underwriters: BMO Capital Markets Corp, Wedbush Securities Inc
Underwriters: Cantor Fitzgerald and Co, Roth Capital Partners Inc

Summary
AGTC is a clinical-stage biotech firm, using a proprietary gene therapy platform to develop treatments for patients with severe inherited orphan diseases in ophthalmology. The firm's lead candidates are designed to address rare diseases of the eye that significantly impact vision and are caused by mutations in single genes. AGTC's treatments deliver functional copies of defective genes to patients' cells via viral vectors, leading to the expression of therapeutic proteins to treat the disease in question. The firm is currently focused on preclinical product candidates designed to treat a trio of diseases, including X-linked retionschisis (XLRS), Achromatopsia (ACHM), and X-linked retinitis pigmentosa (XLRP), and expects to have clinical data on XLRS in mid-2015 and ACHM in late 2015.

(http://agtc.com/products)

Valuation
AGTC offers the following figures in its S-1 balance sheet for the six months ended December 31, 2013:

Revenue: $773,000.00
Net Loss: ($7,799,000.00)
Total Assets: $31,709,000.00
Total Liabilities: $1,859,000.00
Stockholders' Equity: ($43,871,000.00)

AGTC's minimal revenues are typical of a pre-commercial biotech firm, and should not be interpreted as an indicator of the firm's potential success.

Business
AGTC's products may compete both with firms developing similar gene therapy technologies and firms developing treatments for rare diseases of the eye. AGTC believes that the former includes the likes of Sanofi SA (NYSE:SNY), uniQure BV (NASDAQ:QURE), Audentes Therapeutics, BioMarin Pharmaceutical Inc (NASDAQ:BMRN), Celladon Corp (NASDAQ:CLDN), and Spark Therapeutics, among others; the latter includes Genzyme, Gensight, Neurotech Pharmaceuticals, and ReGenX.

Management
President and CEO Susan B. Washer has served has served in her current positions since 2002 after a brief stint as COO. She previously served as president and CEO of Scenic Productions Inc and as the Founding Executive Director and then Business Advisor for the North Florida Technology Innovation Center. She also worked in various research and pharmaceutical management positions with Abbott Laboratories and Eli Lilly and Company. Ms. Washer holds a B.S. in biochemistry from Michigan State University and an M.B.A. from the University of Florida.

Conclusion
We plan to avoid this IPO.

There's no guarantee that AGTC's products will receive FDA approval, and the firm is a long way from commercializing products for any of the diseases that it currently is working on.

We also believe that recent media coverage of a possible biotech bubble-correct or otherwise-could lead investors to be leery of this stock.

Source: Avoid Applied Genetic Technologies IPO