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Based in Alameda, CA, Singulex (SGLX) scheduled a $70 million IPO with a market capitalization of $245 million at a price range mid-point of $16 for Thursday, November 8, 2012.

Five IPOs are scheduled for this week. The full IPO calendar is available here.

S-1 filed October 23, 2012

  • Manager, Joint Managers: UBS Investment Bank; Piper Jaffray.

  • Co Managers: William Blair; Leerink Swann.

SUMMARY
SGLX provides advanced diagnostics to help detect potential heart problems. Revenue for the six months ended June 2012 was up 163% from the six months ended June 2011. Losses increased to -$10 million from -$7 million.

Sales are driven by Life Sciences' customers use of Advanced CVD Monitoring services.

CONCLUSION
SGLX appears to have a breakthrough diagnostic system that may be in considerable demand. It is, however, losing 50 cents on each dollar of sales.

We suggest it is prudent to watch SGLX from the sidelines. If and when breakeven is in sight, then SGLX will be worth quite a bit on the stock market.

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing June 2012 6 mos

Cap (MM)

Sales

Earnings

BookValue

TangibleBV

in IPO

Singulex

$245

6.0

-12

3.9

3.9

29%

Glossary of IPO Analysis terms

BUSINESS
SGLX is an innovative diagnostics company committed to improving patient care and enabling the reduction of healthcare costs by providing high-value, advanced tests for the diagnosis and monitoring of chronic diseases.

SGLX initially focused on cardiovascular disease, or CVD, the leading cause of death globally.

SGLX's high precision digital immunoassay platform and advanced CVD test menu, which includes SGLX's proprietary digital heart function and inflammatory tests, provide clinically important diagnostic information that facilitates personalized disease management by physicians.

SGLX believes its innovative technology platform enables a 10- to 100-fold improvement in measurement sensitivity over other commercially available technologies and measures biomarker concentrations at previously undetectable levels, providing physicians with information that can allow them to diagnose earlier, better monitor and more effectively manage chronic disease progression prior to the onset of acute clinical symptoms.

SALES
SGLX's sales growth is based on its Advanced CVD Monitoring services and, in particular, proprietary tests, and to a lesser extent sales of digital technology instruments and immunoassay services to SGLX Life Sciences customers.

SGLX's Advanced CVD Monitoring services accounted for 27% of revenues for the year ended December 31, 2010, 77% of revenues for the year ended December 31, 2011 and 88% of revenues for the six months ended June 30, 2012.

SGLX expects that revenues and profitability will depend on sales of Advanced CVD Monitoring services for the foreseeable future.

DIGITAL TECHNOLOGY PLATFORM

SGLX's digital technology platform is a benchtop single-molecule counting instrument. We combine our digital technology platform with standard commercially available immunoassay sample preparation processes to digitally measure biomarker concentration.

Since 2007, SGLX has deployed its digital technology platform to over 20 Life Sciences customer locations for research use.

In 2009, SGLX validated its digital technology platform and received CLIA (Clinical Laboratory Improvement Amendments) certification for a laboratory in Alameda, CA.

INTELLECTUAL PROPERTY
As of June 30, 2012, SGLX"s patent estate included five issued U.S. and foreign patents and 61 patent applications pending in the United States and various foreign jurisdictions throughout the world.

One issued patent covers methods for using SGLX's digital platform technology, and one issued patent relates to SGLX's second generation system. These patents expire between 2025 and 2029.

License from the Regents of the University of California
SGLX co-owns with the Regents and has broadly and exclusively licensed from the Regents, under a royalty-bearing license, its interest in U.S. 7,838,250, which expires in 2027, and its related U.S. and foreign applications.

This patent family covers methods for determining the cardiovascular health of an individual, cardiac damage in an individual and cardiac damage progression in an individual using high sensitivity detection of cTnI.

The license provides that the Regents retain rights to make use of the licensed rights for educational and research purposes. Upon entry into the license, SGLX paid the Regents a one-time $25,000 license fee and is required to pay low single-digit royalites based on net sales of licensed products and methods, subject to a minimum annual royalty of $15,000.

Upon the grant of first marketing approval by the FDA for a licensed product, SGLX will be obligated to pay the Regents a one-time $10,000 milestone payment and, upon achievement of a specified sales threshold for licensed products, a one-time $50,000 milestone payment.

To date, SGLX has paid the Regents $100,920 pursuant to obligations under the license agreement.

COMPETITION
SGLX generally compete against providers of conventional lipid panel tests, as well as those providers of more advanced lipoprotein testing systems, with respect to SGLX's lipid panel.

The lipid panel test is widely ordered by physician offices and performed in substantially all clinical diagnostic laboratories. It is relatively inexpensive and reimbursed by virtually all payors.

However, the market for lipid panel tests is highly fragmented, and there is no dominant provider for these tests.

SGLX's lipid panel offering also competes against companies that offer other methods for measuring lipoproteins. Among the companies providing these tests are Berkeley HeartLab, Inc., now part of Quest Diagnostics (DGX), Atherotech, LipoScience, SpectraCell Laboratories, and Health Diagnostics Laboratory.

There are also diagnostic tests available that measure other lipoprotein indicators of cardiovascular disease risk, including apolipoprotein B, or apoB, a protein found on both LDL and VLDL particles. The apoB assay is a non-proprietary test offered by many clinical diagnostic laboratories.

SGLX does not sell its proprietary Sgx HD cTnI test for use in the acute care setting. Thus, SGLX does not compete with providers of cardiac troponin testing in the acute care setting.

USE OF PROCEEDS
SGLX expects to net $62 million from its IPO. Proceeds are allocated as follows:

  • $40.0 million to fund the development of a second generation system and assay menu, including seeking applicable regulatory clearances;

  • $10.0 million to fund sales and marketing activities, including the expansion of the sales force to support the launch and commercialization of SGLX's second generation platform and assay menu;

  • $4.8 million to repay debt.

The remainder for working capital and other general corporate purposes, including research and development activities.

Source: IPO Preview: Singulex