A Look at 2 Biology-Related IPOs

Includes: FLDM, GEVO
by: IPOdesktop

Two biology related IPOs are on tap: Gevo (NASDAQ:GEVO) and Fluidigm (NASDAQ:FLDM). In total 13 IPOs are scheduled to raise $3.4 billion for the week of February 7. See the IPO Calendar.

Gevo (GEVO) plans a $100mm IPO with a market capitalization of $363 million at the price-range mid-point of $14. It's scheduled for Wednesday, February 9, 2010.

CONCLUSION -- a true development stage biofuels company that’s run out of money. Made an acquisition of an ethanol production facility in September 2010 that is losing money. Looks like a poor IPO investment at the price range mid-point of $14.

GEVO Valuation Metrics

BUSINESS -- A development stage renewable chemicals and advanced biofuels company. The strategy is to commercialize biobased alternatives to petroleum-based products using a combination of synthetic biology and chemical technology.

TECHNOLOGY -- GEVO's technology platform consists of proprietary biocatalysts and a proprietary isobutanol separation unit. To establish isobutanol production in a commercial industrial setting, GEVO is now completing the development of its second-generation biocatalyst and is currently is optimizing the yeast's performance to achieve commercial performance targets.

As of October 2010, GEVO’s second-generation biocatalyst has achieved a fermentation time of 52 hours and achieved approximately 94% of the theoretical maximum yield of isobutanol from feedstock, meeting GEVO’s targeted fermentation performance criteria well in advance of the planned commercial launch of isobutanol production in the first half of 2012

INTELLECTUAL PROPERTY -- As of December 31, 2010, GEVO has submitted 184 patent applications in the US and in various foreign jurisdictions

USE OF PROCEEDS of $89mm -- Intends to use all or a portion of the net proceeds of this offering, together with existing cash and cash equivalents, to acquire access to ethanol facilities through direct acquisition and joint ventures, and retrofit those facilities to produce isobutanol.

GEVO completed its acquisition of Agri-Energy in September 2010, at which time Agri-Energy became a subsidiary of Gevo Development. GEVO does not have any other agreements or commitments for any other specific acquisitions at this time.

A portion of the net proceeds of this offering may be used to complete the retrofit of Agri-Energy’s ethanol production facility in Luverne, Minnesota. GEVO may use a portion of the proceeds for working capital.

Fluidigm (FLDM) plans a $75mm IPO with a market capitalization of $270 million at the price range mid-point of $12, scheduled for Thursday, February 10, 2010.

FLDM enables genetic analysis not previously available in many cases. Has sold to over 200 customers in 20 countries worldwide. Sales increased 40% for the nine months ended September 30, 2010 compared to the year earlier period, losses increased 14% to $ 16 million. FLDM generated a very respectable 66% gross margin for the nine months ended September 2010.

The question for FLDM is can FLDM ‘cross the chasm’ from early adopters to the broader market? Seems very speculative at the price range mid-point based on the history of continuing losses.

FLDM Valuation Metrics

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