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Summary

  • KNMD, developer of a biomarker platform technology, used in medical diagnostics and drug development, plans to raise $31.5 million in its upcoming IPO.
  • KNMD is losing money at an accelerating rate, and is scarcely generating revenue despite many powerful partnerships.
  • We plan to avoid this IPO and suggest investors consider doing so, as well.

KineMed Inc (Pending:KNMD), developer of a biomarker platform technology used in medical diagnostics and drug development, plans to raise $31.5 million in its upcoming IPO.

The Emeryville, California-based firm will offer 4.5 million shares at an expected price range of $7-$8 per share. If the IPO can reach the midpoint of that range at $7.50 per share, KNMD will command a market value of $121 million.

Few Underwriters

KNMD filed on January 8, 2014.

Lead Underwriters: Feltl & Company

Underwriters: Laidlaw & Company (UK) Ltd.; MLV & Co. LLC

Business & Partnerships Summary

KNMD is a health technology firm that offers a proprietary biomarker platform technology used in various drug development and medical diagnostic applications.

The firm has developed biomarker tests to measure activity in critical biological pathways that play a causal role in disease. KNMD believes that it may be able to provide previously unavailable medical information through these tests.

The firm currently applies its biomarker tests to revenue-generating collaborations with biopharmaceutical firms and non-profit and government organizations.

The firm has partnered with organizations including GlaxoSmithKline (NYSE:GSK), Nestle, Pfizer Inc (NYSE:PFE), Amgen Inc. (NASDAQ:AMGN), Takeda Pharmaceutical Company (OTCPK:TKPHF), the National Institutes of Health, and the Michael J. Fox Foundation.

KNMD plans to advance its own product candidates through pairings with its biomarker tests. The firm also plans to commercialize its tests for medical and research use outside of its collaborations.

Valuation

KNMD offers the following figures in its S-1 balance sheet for the three months ended March 31, 2014:

Revenue: $1,386,000.00

Net Loss: ($113,000.00)

Total Assets: $11,103,000.00

Total Liabilities: $5,601,000.00

Stockholders' Equity: ($17,498,000.00)

Anticipated Competition

KNMD's products will primarily compete with traditional methods of diagnosis; it may prove challenging to convince physicians to accept KNMD's products over proven methods.

Though KNMD does not face direct competitors as of now, the firm anticipates potential competition from firms interested in developing similar biomarker tests in the future, some of which may have access to greater financial and technical resources than KNMD.

Management Highlights

Cofounder David M. Fineman has served as KNMD's Chairman and Chief Executive Officer since 2001; he also served as the firm's President until July 2013.

Mr. Fineman previously co-founded and served as CFO of SuperGen, Inc., which was acquired by Otsuka Pharmaceuticals Co. Ltd. in October 2013.

He also co-founded Quark Pharmaceuticals, Inc. Mr. Fineman holds a B.A. in English from the University of Maryland and an M.A. in Psychology from the Graduate Faculty of the New School for Social Research.

Conclusion: Avoid This IPO

We plan to avoid this IPO.

KNMD is losing money at an accelerating rate, and is scarcely generating revenue despite the many revenue-generating collaborations that it claims in its S-1 filing.

Though the firm plans to use its biomarker tests to advance its own product candidates, it has yet to commercialize any candidate or make significant progress in gaining regulatory approval for its candidates.

KNMD also has yet to commercialize any of its tests. There is little guarantee that the new facility the firm plans to construct with the proceeds from this IPO will lead to improved figures.

KNMD's IPO underwriters are far from impressive. At this point, we see no compelling reason to gamble on KNMD.

Note: As a large sample of information sources does not yet exist for KNMD, we have taken much of the information for this article directly from KNMD' S-1 filing.

We invite readers wishing to join the discussion on IPOs to click the+FOLLOW button above the title of this article.

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

Source: IPO For KineMed Does Not Pass The Test