IPOdesktop's  Instablog

Nov 8wk IPO calendar

Complete Genomics (GNOM) $78 IPO million
with a market cap of $338 million at the price range mid-point of $13.
Scheduled for Wednesday, November 10, 2010

SUMMARY

If you like PACB you might want to iversify and own some GNOM. On the other hand, if you like visible sales and profits you’ll pass on both companies.

Compare with Pacific Biosciences (PACB) which IPO’d October 26 at $16 and is now a little above $16. PACB offers a platform which needs PACB consumables. GNOM has a backlog of $9 million. PACP has a backlog of $15 million.

GNOM IPO pricing is based on PACB pricing. For example, notice in the table below that the valuation metrics are similar.

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

Annualizing June 6 mos

Cap (mm)

Backlog

Earnings

BookValue

TangibleBV

Complete GenmcsGNOM

$338

38

-6.3

2.9

2.9

Pacific Biosciences

$819

55

-6.5

2.6

2.6

BUSINESS

Outsourced DNA/genomic sequencing

. Combines proprietary human genome sequencing technology, which achieves accuracy levels of 99.999%, with advanced informatics and data management software and an end-to-end service model
. To deliver research-ready genomic data at a total cost that is, according the GNOM, significantly less than the total cost of purchasing and using commercially available DNA sequencing instruments.

MARKET

. Scientia Advisors, a third-party research firm, estimated genomic revenue in 2009 to be approximately $5.8 billion and projects the market to grow to approximately $9.0 billion by 2014.
. Scientia Advisors further estimates that human genomics research will grow from $4.6 billion in 2009 to $7.3 billion in 2014.

BACKLOG

. As of September 30, 2010, had a backlog of orders for sequencing over 800 genomes. This figure represents the number of genomes for which customers have placed sequencing orders that GNOM believes are firm and for which GNOM has not yet recognized revenue.
. GNOM believes that its sequencing orders in backlog as of September 30, 2010 will result in approximately $9.0 million of revenue during the 12 months following that date

INTELLECTUAL PROPERTY

As of July 17, 2010, GNOM has from Callida six issued U.S. patents and six issued international patents that will expire between 2014 and 2027. As of July 17, 2010, we own or have licensed 97 pending patent applications, including 54 in the United States, 30 international applications and 13 applications filed under the Patent Cooperation Treaty.

COMPETITION

Established companies such as Illumina (ILMN), Life Technologies (LIFE) and Roche Diagnostics are marketing instruments for genetic sequencing that are directly competitive with GNOM’s services.

There are many smaller companies, such as NABsys, Inc., Oxford Nanopore Technologies, Ltd., Pacific Biosciences (PACB) and Helicos Biosciences Corporation, that are developing sequencing technology that would compete with GNOM.

In addition, there are many research, academic and other non-profit institutions that are pursuing new sequencing technologies. These institutions often have access to significant government and other funding. For example, BGI (formerly known as Beijing Genomics Institute) in the People’s Republic of China offers a service that is similar to GNOM’s and is funded by the government of China.
In the United States, agencies such as the National Human Genome Research Institute provide funding to institutions to discover new sequencing technology.

In addition to commercial companies, there are large, government-funded or research-sponsored organizations, such as the Broad Institute of MIT and Harvard, the Genome Center at Washington University, the Baylor College of Medicine Human Genome Sequencing Center, the Wellcome Trust Sanger Institute and BGI (formerly known as Beijing Genome Institute), that purchase commercial DNA sequencing instruments and offer DNA sequencing services to academic and commercial customers.

EMPLOYEES

As of September 30, 2010, had a total of 167 employees, 49 of whom hold Ph.D. degrees and 66 of whom are engaged in full-time research and development activities.

USE OF PROCEEDS
$69mm

. $20.0 million to $25.0 million of t to expand the sequencing and computing capacity
. $15.0 million to $25.0 million for further development of sequencing technology and services
. $10.0 million to $15.0 million for sales and marketing activities
. Remainder for working capital

Complete Genomics

GNOM, C, 6

Post-IPO shares: 26mm

Genome sequencing

IPO Mkt

Mountain View CA

no revenue

Cap (mm)

$338

@$13

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Price /

% offered

annualizing June 6 mos

Cap (mm)

Backlog

Earnings

BookValue

TangibleBV

in IPO

Complete GenmcsGNOM

$338

38

-6.3

2.9

2.9

23%

Pacific Biosciences

$819

55

-6.5

2.6

2.6

10%

SCORECARD

Mgt

Market

Market Do-

Proprie-

Total

1-5, 5 is high

Growth

mination

tary

rating

20 is perfect

2

2

0

2

6