Cancer Prevention Pharmaceuticals
CPP's IPO is seeking to raise only $25 million but what they are trying to achieve is mind blowing. Now, as an IPO follower I have seen many companies in all sectors announce lofty goals, and sure they sound good on paper but most of these ideas never see the light of day. In the biotech space most investors will hope for the best and assume the worst in terms of what these companies can achieve. CPP however can boast that their drugs (CPP-1X/sul and CPP-1X) have made it all the way to Phase 3 of clinical trials.
Why does that matter?
Well, lets look at the stats:
- 97% of drugs in the pre-clinical stage never see the light of day, this number goes down to 95% for drugs under phase 1 trials, and finally 88% for drugs in phase 2 trials. Remember that their drugs have already made it to Phase 3, which brings their chances up to 54%.
So what is CPP-1X/sul and CPP-1X?
Well, first off you almost need a bio-medical engineering degree to understand this stuff, but to put in layman's terms the company is attempting to cure colon cancer...Sort of. See, their drugs are trying to cure colon related cancer cells from the start. They make no claims to cure an existing illness, but through the use of a two step process they hope to be able to essentially block the colon cancer cells.
Now the company has devoted a substantial portion of its financial resources in the development of CPP-1X/sul and CPP-1X, and so far it seems to be the right call. But, as an investor you need to know that you are taking shot in the dark here. This isn't like most companies where one can fully understand how many widgets they are selling and weigh that against their liabilities.
Looking at the company's S-1 filing, the company has accumulated losses of $20.2 million, and recorded net losses of $3.3 and 4.4 million respectively for the 9 month period ending 30 September 2015 and 2014 respectively. Now, do you give them some credit as they are in the research and clinical phase?
Looking at their proposed IPO, the company is looking to price in a range of $12-14 which puts an initial valuation of approximately $320-350 million. This on a company which may be years before it may or may not generate any revenue whatsoever. But, if they are successful the stand to unlock the potential of a $10 billion colo-rectal cancer market which they would be able to dominate.