IPO Update: Genelux Completes $16M IPO Plan (pending: GNLX) – Seeking Alpha | Jewelry Dukan

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What is Genelux?

Based in Westlake Village, California, Genelux (GNLX) was formed to develop treatments for various aggressive or difficult-to-treat solid cancers.

Management is led by President and CEO Thomas Zindrick, JD, who has been with the company since May 2014 and was previously CEO of Amitech Therapeutics Solutions and held the position of Vice President Associate General Counsel at Amgen.

The company’s lead candidate is Olvi-Vec, which is in phase 3 of planning for the treatment of platinum-resistant/refractory ovarian cancer [PRROC] and which has already met a preliminary endpoint for its Phase 2 study in this disease.

Below is the current status of the Company’s drug development pipeline:

corporate pipeline

corporate pipeline (SEC EDGAR)

As of June 30, 2022, Genelux has booked investments at market value of $168.9 million in equity and convertible bonds from investors.

Genelux market and competition

According to a 2018 market research report by bcc Research, the global market for ovarian cancer therapeutics was estimated at US$2.1 billion in 2017 and is projected to reach US$2.9 billion by 2022.

This equates to a projected compound annual growth rate (CAGR) of 7.1% from 2017 to 2022.

Key elements driving this anticipated growth are an increasing incidence of cancer as the world population ages and the effectiveness of the immune system declines.

New drug classes are also expected to be approved, with five new drugs expected to be approved by 2028.

However, the increasing use of biosimilars and generics will likely restrain the growth of the overall dollar value of the market over time.

In particular, GlobalData Estimate for Ovarian Cancer Market has a much higher Estimate with the market forecast to reach $6.7 billion by 2028.

Key competing vendors offering or developing related treatments include:

  • amgen

  • AstraZeneca

  • Boehringer Ingelheim

  • CG Oncology

  • Candel Therapeutics

  • Daiichi Sankyo

  • DNA trix

  • Johnson&Johnson

  • note

  • Oncolytics Biotech

  • Cancer

  • Reply Immune

  • SillaJen

  • Targovax USA

  • Transgenic SA

  • Other

Genelux IPO date and details

The date of Genelux’s initial public offering or initial public offering has yet to be determined by the company.

(Warning: Compared to stocks with more history, IPOs typically have less information for investors to review and analyze. For this reason, investors should exercise caution when considering investing in an IPO or immediately after an IPO. Also Investors should stick with it, however, remember that many IPOs are heavily marketed, past company performance is no guarantee of future results, and potential risks may be underestimated.)

GNLX intends to sell 2.5 million shares of its common stock at a proposed mid-point price of $6.50 per share for gross proceeds of approximately $16.25 million, excluding the sale of customary underwriter options.

No existing or potential new shareholders have expressed an interest in purchasing shares at the IPO price.

Assuming a successful IPO in the middle of the proposed price range, the Company’s enterprise value at IPO (excluding underwriter options) would be approximately $135.5 million.

The free float to outstanding share ratio (excluding underwriter options) will be approximately 10.6%. A number below 10% is generally considered a “low float” stock, which can experience significant price volatility.

According to the Company’s most recent regulatory filing, it plans to use the net proceeds as follows:

approximately $7.7 million to fund the clinical development of our lead product candidate Olvi-Vec in PRROC;

approximately $1.0 million to settle outstanding debt; and

all remaining proceeds for working capital and general corporate purposes.

(Source – SEC)

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

With respect to pending litigation, management says the Company is not currently a party and has received no notice of any material litigation against it.

Listed underwriters for the IPO are The Benchmark Company and Brookline Capital Markets.

How to invest in the company’s stock: 7 steps

Investors can buy shares of GNLX in the same way as shares of other publicly traded companies or as part of a pre-IPO allocation.

Note: This report is not a recommendation to buy GNLX stock or any other security. For investors interested in making a potential investment once the GNLX IPO closes, the following steps to buying shares will be helpful.

Step 1: Understand the financial history of the company

Although not much public financial information is available about the company, investors can view the company’s financial history on its Form S-1 or F-1 with the SEC (source).

Step 2: Evaluate the company’s financial reports

The primary financial statements available for publicly traded companies include the income statement, balance sheet, and cash flow statement. These financial statements can help investors understand a company’s cash capitalization structure, cash flow trends, and financial condition.

The company’s recent financial results are typical of a clinical-stage biopharmaceutical company, showing no revenues and significant R&D and G&A expenses related to advancing its pipeline.

Below are the Company’s financial results for the last two calendar years:

Operating Invoice

Operating Invoice (SEC EDGAR)

As of June 30, 2022, the Company had $4.2 million in cash and $48.2 million in total debt.

Step 3: Evaluate the company’s potential against your investment horizon

When investors evaluate potential stocks to buy, it’s important to consider their time horizon and risk tolerance before buying stocks. For example, a swing trader might be interested in short-term growth potential, while a long-term investor might prioritize strong financials over short-term price moves.

Step 4: Choose a brokerage

Investors who do not already have a trading account start by choosing a brokerage firm. Account types commonly used for trading stocks include a standard brokerage account or a retirement account like an IRA.

Investors who prefer fee-based advice can open a trading account with a full-service broker or independent investment advisor, and those looking to manage their portfolio at a reduced cost can opt for a discount brokerage firm.

Step 5: Choose an investment size and strategy

Investors who have decided to buy shares in the company should consider how many shares they want to buy and what investment strategy they want to adopt for their new position. The investment strategy determines an investor’s holding period and exit strategy.

Many investors choose to buy stocks and hold them for an extended period of time. Examples of basic investment strategies are swing trading, short-term trading, or investing over a long-term holding period.

Investors wishing to receive an allotment of shares at the IPO price would “express interest” to their broker prior to the IPO. Declaring an interest is not a guarantee that the investor will receive an allotment of shares prior to the IPO.

Step 6: Choose an order type

Investors have many ways of placing orders to buy stocks, including market orders, limit orders, and stop orders.

  • Market Order: This is the most common type of order filled by retail traders. A market order executes a trade immediately at the best available transaction price.

  • Limit Order: When an investor places a buy limit order, they set a maximum price to be paid for the shares.

  • Stop Order: A buy stop order is an order to buy at a specific price, known as the stop price, which will be higher than the current market price. In the case of buy stop, the stop price is lower than the current market price.

Step 7: Submit the trade

After investors fund their account with cash, they can set an investment size and order type, and then submit the trade to place an order. If the trade is a market order, it will be executed immediately at the best available market price.

However, when investors place a limit order or stop order, the investor may have to wait for the stock to reach its target price or stop-loss price for the trade to complete.

Comment on Genelux

GNLX is seeking investments in the US public capital market to fund the continued advancement of its treatment pipeline through mid- and late-stage studies.

The Company’s lead candidate, Olvi-Vec, is in Phase 3 of the planning phase for the treatment of platinum-resistant/refractory ovarian cancer [PRROC] and which has already met a preliminary endpoint for its Phase 2 study in this disease.

The market opportunity for Ovarian Cancer Treatments is quite large and is expected to grow at a moderate growth rate in the coming years.

Management has not announced any collaboration with major pharmaceutical companies.

The Company’s investor syndicate does not include any well-known institutional life science investors or strategic investors.

The Benchmark Company is the lead underwriter and the four IPOs led by the firm in the past 12 months have generated an average return of 85.5% since its listing. This is a peak performance for all major underwriters over the period.

Genelux has achieved a milestone that many biopharmaceutical companies have not achieved when going public, namely reaching a Phase 2 efficacy endpoint. In this respect, the IPO is somewhat unusual in a positive sense.

As for the valuation, management is asking investors to pay an enterprise value of around $136 million at the IPO. This is well below the typical range for a biopharmaceutical company going public.

While the company will likely require additional funding for future trial activities, my IPO guidance for life science investors with a patient holding time frame is to buy for up to $6.50 per share given the positive results of the Phase 2 trial to date .

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