Quick Take

Seer (SEER) has filed to raise $150 million in an IPO of its Class A common stock, according to an S-1 registration statement.

The firm is developing integrated proteome analysis instruments for biopharmaceutical research.

SEER’s products have yet to be commercialized, but the company will operate in a growing industry and is headed by a CEO with impressive life science startup credentials.

I’ll provide a final update when we learn more about the IPO.

Company & Technology

Redwood City, California-based Seer was founded to develop instruments to analyze proteins for basic research and discovery.

Management is headed by co-founder and CEO Omid Farokhzad, M.D., who was previously Professor at Harvard Medical School and co-founded BIND Therapeutics, Selecta Biosciences, and Tarveda Therapeutics.

Below is a brief overview video of proteomics research:

Source: Sensu Film

The firm is developing what it calls the Proteograph Product Suite, ‘which will leverage our proprietary engineered nanoparticle [NP] technology to provide unbiased, deep, rapid and large-scale access across the proteome.’

Investors in the firm have invested at least $167 million and include Maverick Capital, Invus Public Equities, aMoon Fund, Fidelity, Emerson Collective, and T. Rowe Price.

Market & Competition

According to a 2016 market research report by Grand View Research, the global market for proteomics was valued nearly $12 billion in 2015.

The market comprises three segments, Instrument, Reagents, and Services.

The reagents segment has been the largest and fastest growing segment of the market.

The graphic below shows the historical and projected U.S. proteomics research market by segment:

Key elements driving this expected growth are continued advancements in research and development efforts as well as more favorable regulations and government policies to support research activities.

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Also, the fastest-growing application of proteomics research is its use in clinical diagnosis, while North America has represented the largest market by region, with its value expected to reach $9 billion by 2024.The Asia Pacific region is expected to see strong growth of more than 12% CAGR through 2024.

Major competitive vendors that provide or are developing related treatments include:

  • Roche Diagnostics (OTCQX:RHHBY)

  • Bio-Rad Laboratories (NYSE:BIO)

  • Thermo Fisher Scientific (NYSE:TMO)

  • GE Healthcare (NYSE:GE)

  • Sygnis

Financial Status

Seer’s recent financial results show little revenue as the firm is still in product development stage.

Below are the company’s financial results for the past two and ¾ years (Audited PCAOB for full years):

Source: Company registration statement

As of September 30, 2020, the company had $121.5 million in cash and $8.4 million in total liabilities. (Unaudited, interim)

IPO Details

Seer intends to raise $150 million in gross proceeds from an IPO of its Class A common stock, although the final figure may differ.

Existing shareholders have indicated an interest to purchase shares of up to $135 million in the aggregate at the IPO price in a concurrent private placement.

Class A shareholders will be entitled to one vote per share and Class B shareholders will have ten votes per share.

The S&P 500 Index no longer admits firms with multiple classes of stock into its index.

Management says it will use the net proceeds from the IPO as follows:

to commercialize our Proteograph Product Suite and for ongoing sales and marketing activities; and

the remainder for other development work associated with advancing our Proteograph Product Suite, research and development, and general corporate purposes.

Management’s presentation of the company roadshow is not available.

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Listed bookrunners of the IPO are J.P. Morgan, Morgan Stanley, BofA Securities, and Cowen.

Commentary

Seer is seeking a somewhat large IPO amount for a company that doesn’t have significant revenue. The firm’s system is planned for initial limited release among a small number of marquee clients in 2021. Management expects to begin broader commercialization in 2022.

The market opportunity for proteomics research instruments is substantial and expected to grow at a moderate rate over the medium term.

The company’s investor syndicate does not include any mainline life science investment venture capital firms.

J.P. Morgan is the lead left underwriter, and IPOs led by the firm over the last 12-month period have generated an average return of 68.4% since their IPO. This is a top-tier performance for all major underwriters during the period.

Seer is an unusual IPO candidate in that the firm’s product suite is not yet in the market, so there is no revenue or profit trajectory to ascertain.

However, the CEO has an impressive history of founding successful life science companies, and the firm is operating in a growing industry of interest.

When we learn more about the IPO’s pricing and valuation assumptions, I’ll provide a final opinion.

Expected IPO Pricing Date: To be announced.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Via SeekingAlpha.com