IPO Preview: KineMed

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 |  About: KineMed (KNMD)
by: IPOdesktop

Summary

KNMD has a number of collaborations but no clinical trials to-date.

KNMD is a revenue-generating health technology company that has developed a proprietary biomarker platform technology with numerous applications in drug development and medical diagnostics.

Research agreements with pharmaceutical and biotechnology companies include Glaxo Group Limited, or GSK, Pfizer, and Bristol Myers Squibb.

Based in Emeryville, CA, KineMed (Pending:KNMD) scheduled a $31 million IPO on the Nasdaq with a market capitalization of $114 million at a price range midpoint of $7 for Wednesday June 25, 2014.

The full IPO calendar is available at IPOpremium

SEC Documents

Manager: Felti
Co-Managers: MLV & Co./ Laidlaw & Company (NASDAQ:UK) Ltd.

Summary

KNMD is a revenue-generating health technology company that has developed a proprietary biomarker platform technology with numerous applications in drug development and medical diagnostics.

KNMD has completed no clinical trials to-date.

Valuation

Glossary

Valuation Ratios

Mrkt Cap (MM)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

annualizing Q1 '14

KineMed

$114

20.4

-17.8

3.4

3.4

28%

Click to enlarge

Conclusion

KNMD has a number of collaborations but no clinical trials to-date.

The rating is negative.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.

Business

KNMD is a revenue-generating health technology company that has developed a proprietary biomarker platform technology with numerous applications in drug development and medical diagnostics.

The revenue is from collaborations.

Clinical trials
None-to-date

Revenue
KNMD's revenue to date has been from agreements under which KNMD provides biomarker research services.

KNMD provided these services under collaboration and other research agreements with pharmaceutical and biotechnology companies, including Glaxo Group Limited, or GSK, Pfizer, and Bristol Myers Squibb.

KNMD also received research grant revenue from various research institutions, including the Michael J. Fox Foundation and the National Institutes of Health.

KNMD has not generated any revenue from sales of biomarker tests or from its own drug candidates.

Focus

KNMD's focus is on applying its biomarker platform technology to drug development collaborations with biopharmaceutical companies, prescription and non-prescription medical diagnostics and the pairing of its own drug candidates with its diagnostic, prognostic and monitoring biomarker tests, or biomarker tests.

KNMD has an extensive record of collaborating with biopharmaceutical companies and others to applies its biomarkers to drug development.

KNMD has entered into over 100 revenue-generating collaborations with biopharmaceutical companies, non-profit foundations and government agencies.

KNMD's collaborators have included Glaxo Group Limited, or GSK, Pfizer Inc., University of Cambridge, EMD Serono, Takeda Pharmaceutical Company, Nestle and Amgen Inc. as well as the National Institutes of Health, or NIH, and medical research foundations, such as the Michael J. Fox Foundation, the Cure Huntington's Disease Initiative Foundation, or CHDI, and the Susan G. Komen Breast Cancer Foundation.

Biomarkers

Biomarkers are measurable characteristics about the state of a living organism that are relevant to health and disease.

Using its patented technology, KNMD has developed biomarker tests that measure, in a single sample, the rate of activity of critical biological pathways that play a causal role in disease.

KNMD believes that its ability to measure this activity, which reflects the rate of production and destruction of key molecules involved in disease-modifying biological processes, will provide meaningful, and previously unavailable, information about both diseases and wellness that is predictive of medical outcomes and of the effects of interventions.

Rate-based measurements

As a result, KNMD believes its biomarker tests have the potential to have a transformative effect on healthcare by providing unique information through rate-based measurements that can be used to make drug development more efficient and to guide healthcare decisions by physicians and wellness decisions by consumers.

Dividend Policy

No dividends are planned.

Intellectual Property

Over the past decade, KNMD has assembled in the field of molecular flux biomarkers, 7 pending patent applications that it holds directly and over 85 issued and 20 pending U.S. and international patents exclusively licensed by KNMD from the Regents of the University of California, which were invented or co-invented by its President and Chief Scientific Officer and University of California professor Dr. Marc Hellerstein.

Competition

KNMD faces competition as existing companies develop new or improved products, and as companies enter the market with new technologies, such as microarrays, gene-sequencing technologies, and other types of biomarkers.

Projects in these areas have also received increased government funding, both in the United States and internationally.

As more information regarding these approaches becomes available to the public, KNMD anticipates that more products aimed at identifying targeted treatment options will be developed and that these products may compete with KNMD's, or be available on the market before its tests are available.

5% stockholders

David M. Fineman 12.7%

Marc K. Hellerstein, M.D., Ph.D. 5.5%

David M. Chester 5.6%

Use of proceeds

KNMD expects to net $26 million from its IPO. Proceeds are allocated as follows:

$15 million to support 510(k) applications for its diagnostic, prognostic and monitoring biomarker tests, or biomarker tests, for the first three disease states for which KNMD intends to seek FDA clearance - muscle biology, liver fibrosis and chronic lymphocytic leukemia - and for either follow-on clinical trials related to initial commercialization activities or pre-approval clinical trials, if required by the FDA. The 510(k) applications will be submitted to the FDA in order to request permission for commercial distribution of the biomarker tests. KNMD estimates that the clinical trial and related 510(k) application cost expenditures will occur over a two to three year period from the closing of this offering;

$6 million to fund the start-up and initial development of a CLIA-certified laboratory, which is estimated to occur over the development period of the above 510(k) applications and their supporting trials;

$5 million to fund costs associated with a Phase 1/2 trial for noscapine and a Phase 1 trial for the 5A peptide (not including grant funding from the NIH for IND-enabling toxicity studies and synthesis of compound work for its 5A peptide), with each trial estimated to enroll approximately 20 to 30 patients; and

the remainder for working capital and general corporate purposes, including continued development of its biomarker platform technology.

Disclaimer: This KNMD IPO report is based on a reading and analysis of KNMD's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in 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. The author has no business relationship with any company whose stock is mentioned in this article.