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Summary

  • QTNT, a commercial-stage medical diagnostic firm, develops tests for blood diseases.
  • QTNT plans to raise $75.0 million in its upcoming IPO, offering 5.0 million shares at an expected price range of $14-$16 per share.
  • We are neutral on this IPO as QTNT’s new platform has yet to commercialize; the IPO lacks very strong underwriters.

Quotient Ltd. (NASDAQ:QTNT), a commercial-stage medical diagnostic firm, developing tests for blood diseases, plans to raise $75.0 million in its upcoming IPO this week.

The Midlothian, UK-based firm will offer 5.0 million shares at an expected price range of $14-$16 per share. If the IPO can find the midpoint of that range at $15 per share, QTNT will command a market value of $225 million.

QTNT filed on March 7, 2014.

Lead Underwriters: Cowen and Company LLC, Robert W Baird & Co Incorporated, UBS Investment Bank

Overview of QTNT

QTNT is a commercial-stage diagnostic firm, engaged in the development and commercialization of tests for blood grouping and serological disease screening.

The firm is in the process of developing its MosaiQ technology platform, which would be the first fully automated, commercially available platform, able to identify all clinically significant blood-group antigens and antibodies in donor or patient blood simultaneously, as well as performing all currently mandated disease screening tests.

The platform will be able to perform tests at relatively high speed, and will allow for simpler matching of donor and patient blood. QTNT anticipates a full commercial launch of MosaiQ in the second half of 2016 in Europe and the first half of 2017 in the United States.

Valuation

QTNT offers the following figures in its S-1 balance sheet for the nine months ended December 31, 2013:

Revenue: $15,100,000.00

Net Loss: ($4,952,000.00)

Total Assets: $26,378,000.00

Total Liabilities: $22,184,000.00

Stockholders' Equity: ($26,569,000.00)

Strong Competition

QTNT competes with other providers of diagnostic equipment for blood grouping. The firm considers its major competitors to be Ortho, Immucor, and Bio-Rad (NYSE:BIO). Many of these competitors have greater financial resources than QTNT.

Management With Cross-Sectoral Experience

Chairman and CEO Paul Cowan founded QTNT through the acquisition of Alba Bioscience in 2007. He previously served as the CFO of Inveresk Research Group and as a senior executive with the famous Bear Stearns & Co. Mr. Cowan also worked as a senior executive within the Investment Banking department of Morgan Grenfell.

Mr. Cowan holds a Bachelor of Business in accounting from Queensland University of Technology.

Investors Should Wait For QTNT To Commercialize

While MosaiQ is certainly a massive opportunity for QTNT, which could represent a new standard in blood diagnostics, QTNT may be years from commercializing its new technology platform, which will face heavy competition from extant diagnostic technologies even if it does reach commercialization.

QTNT appears a promising prospect, but it is still a great distance from achieving sustainable profitability.

The lack of more high-profile underwriters also suggests major investment banks could also be lukewarm on QTNT.

We are neutral on this IPO, and suggest investors wait for more clearly profitable picks.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: Neutral 'Diagnosis' Of Quotient Ltd. IPO