News Column

IPO Report: Biocept (BIOC)

February 1, 2014

Francis Gaskins

Biocept (BIOC) is an early-stage cancer diagnostics company that develops and commercializes proprietary circulating tumor cell, or CTC, and circulating tumor DNA, or ctDNA, tests utilizing a standard blood sample. 13 other companies are scheduled to IPO this week. The full IPO calendar is available at IPOpremium.com BIOC scheduled a $20 million IPO with a market capitalization of $52 million at a price range midpoint of $11 for Wednesday, February 5, 2014 , on the Nasdaq Manager, Joint managers: Aegis Capital Co-Managers: Feltl and Company , MLV & Co SEC Documents Overview In May 2013 BIOC lost its commercialization partner and now appears to be struggling with sales and marketing. Valuation Glossary Cash burn rate: when a company loses money with minimal depreciation & amortization (think biopharmas), the negative Price/Loss ratio is an indication of cash burn rate. The higher the loss the lower the absolute (negative) ratio. The lower the loss the higher the absolute (negative) ratio. Valuation Ratios Mrkt Price / Price / Price / Price / % offered annualizing Sept 9 mos Cap (mm) Sls Erngs BkVlue TanBV in IPO Biocept (BIOC) $48 1,436 -5.3 -13.7 3.3 42% Note: something is strange with BIOC's accounting Price-to-book is never negative with a positive price-to-tangible book value Conclusion Avoid, losing the commercialization partner makes future sales not visible, high cash burn rate. Business BIOC is an early-stage cancer diagnostics company that develops and commercializes proprietary circulating tumor cell, or CTC, and circulating tumor DNA, or ctDNA, tests utilizing a standard blood sample. BIOC lost its commercialization partner From August 2011 to May 2013 , BIOC and its commercialization partner Clarient Diagnostic Services, Inc. , or Clarient, were the exclusive marketers of the OncoCEE-BR test and BIOC performed, on average, approximately 10 tests per month under the commercialization agreement with Clarient beginning from the first test under the commercialization agreement with Clarient in March 2012 . In May 2013 , BIOC amended the commercialization agreement with Clarient such that Clarient is no longer the exclusive marketing partner for the test. Because BIOC does not yet have an in-house sales force, this resulted in a reduction in the commercial testing rate. Only in November 2013 did BIOC first directly bill any payor for physician-ordered testing; until May 2013 Clarient was responsible for all billing associated with BIOC's tests Current breast cancer test BIOC's current CTC breast cancer test provides, and its planned future tests would provide, information to oncologists that enable them to select appropriate personalized treatment for their patients based on better, timelier and more-detailed data on the characteristics of tumors. BIOC's current breast cancer test and its planned future tests utilize its Cell Enrichment and Extraction (CEE) technology for the enumeration and analysis of CTCs, and its CEE-Selector technology for the detection and analysis of ctDNA, each performed on a standard blood sample. The CEE technology is an internally developed, microfluidics-based CTC capture and analysis platform, with enabling features that change how CTC testing can be used by clinicians by providing real-time biomarker monitoring with only a standard blood sample. The CEE-Selector technology enables mutation detection with enhanced sensitivity and specificity and is applicable to nucleic acid from CTCs or other samples types, such as blood plasma for ctDNA. BIOC believes the CEE-Selector technology is an important part of certain of its pipeline CTC tests and will be a stand-alone test for molecular analysis of biomarkers. Intellectual property BIOC's patent portfolio consists of 3 issued U.S. patents, 6 pending U.S. patent applications and corresponding foreign patents and foreign patent applications. These patents and patent applications are related to various aspects of its current and planned CTC and ctDNA tests, including its CEE microfluidic channels, its CEE-Sure blood collection tubes, CEE-Cap antibody capture cocktail, CEE-Enhanced staining methodology, and CEE-Selector technology for mutation detection. Competition BIOC's principal competition comes from mainstream diagnostic methods, used by pathologists and oncologists for many years, which focus on tumor tissue analysis. It may be difficult to change the methods or behavior of oncologists to incorporate its CTC and ctDNA testing, including molecular diagnostic testing, into their practices in conjunction with or instead of tissue biopsies and analysis. In addition, companies offering capital equipment and kits or reagents to local pathology laboratories represent another source of potential competition. These kits are used directly by the pathologist, which can facilitate adoption. BIOC plans to focus its marketing and sales efforts on medical oncologists rather than on pathologists. 5% stockholders Claire K. T. Reiss 78.4% Goodman Co. Ltd. 5.6% Michael W. Nall 5.2% Use of proceeds BIOC expects to net $17.7 million from its IPO. Proceeds are allocated as follows: $5 million to hire sales and marketing personnel and support increased sales and marketing activities; $5 million to fund further research and development, clinical utility studies and future enhancements of its current test and its planned tests and services; $3 million to acquire equipment, implement automation and scale its capabilities to prepare for significant test volume; $1 million to satisfy deferred salary obligations; and the balance for general corporate purposes and to fund ongoing operations and expansion of its business.


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Source: Equities.com


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