Two Biotech IPOs Ahead This Week

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Includes: ASMB, BGMD
by: IPOdesktop

IPOs on tap include: BG Medicine (NASDAQ:BGMD), Ventrus Biosciences (VTUS). 8 others scheduled for the week of December 13 totaling $2 billion.

BG Medicine (BGMD): $67mm IPO with a market cap of $248 at the price range mid-point of $14. Scheduled for Wednesday, December 15, 2010.

CONCLUSION

BGMD is currently cash flow negative but deserves watching, to see development and commercialization agreements mature. Collaboration and commercialization agreements exist with Abbott Laboratories (NYSE:ABT) , Alere (NYSE:ALR) and bioMérieux SA, and with Laboratory Corporation of America (NYSE:LH).

BGMD Valuation Metrics

BUSINESS
Blood tests for heart disease, to be used with existing automated laboratory equipment. An aid for assessing the prognosis of patients diagnosed with chronic heart failure. Received 510(k) clearance from the FDA in November 2010 for a manual version of the BGM Galectin-3 test, which BGMD intends to make available in December 2010. In addition, obtained CE Mark in the European Union for a manual galectin-3 test in October 2009 and has begun limited sales and marketing activities in certain countries in Europe.

USE OF IPO PROCEEDS, $60mm:

  • $20.0 million to $25.0 million to fund the commercial launch of the lead product, BGM Galectin-3, including establishing a commercial organization and infrastructure, and to fund development, potential regulatory submission and potential commercial launch activities for the second indication of the galectin-3 test to identify patients at elevated risk for heart failure following a heart attack;
  • $10.0 million to $15.0 million to fund development, potential regulatory submission and potential commercial launch activities for other cardiovascular diagnostic product candidates, including AMIPredict and LipidDx;
  • $5.0 million to $10.0 million for biomarker discovery and potential clinical development of additional diagnostic product candidates; and
  • Remainder for other general corporate purposes, including capital expenditures, licensing of intellectual property, repayment of debt and working capital.

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Ventrus Biosciences (VTUS): $18mm IPO with a market cap of $42mm at the price range mid-point of $6.5. Scheduled for Thursday, December 16, 2010.

CONCLUSION
Small Pharma IPO losing money at an annual rate of $9 million on a market cap of $42 million. Low grade & score: C and 5

VTUS Valuation Metrics

BUSINESS
Specialty pharmaceuticals focused on the development and commercialization of late-stage prescription drugs for gastrointestinal disorders, specifically hemorrhoids, anal fissures and fecal incontinence.

USE OF PROCEEDS, $15.5mm:

  • $8.0 million to conduct and complete the planned Phase III clinical trial of iferanserin (VEN 309) in the treatment of hemorrhoids;
  • $3.8 million to continue the development of diltiazem cream (VEN 307);
  • $846,500 to repay existing indebtedness;
  • $2.9 million for general and administrative expenses.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.