Dr. Soon-Shiong’s CAR-T IPO NantKwest
In an article last year, we highlighted a very ambitious startup called Nanthealth which is looking to revolutionize healthcare. Perhaps the most compelling aspect of Nanthealth is their leader, a certain Dr. Patrick Soon-Shiong whose past achievements in building successful companies has made him the most wealthiest American in the healthcare industry today.
Earlier this year, we wrote about how Nanthealth may be looking to IPO, even in the face of some rather nasty litigation instituted by their ex-employees. Now it appears that Dr. Soon-Shiong is planning an IPO of one of his many ventures, this particular one which addresses the red hot cancer immunotherapy market. This company is called NantKwest.
Originally known as Conkwest, the Company was founded in 2006 and at that time met with Dr. Soon-Shiong who provided them with free consultancy services. Then eight years later in December of 2014, Dr. Soon-Shiong made an equity investment in Conkwest and joined the Company as their Chief Medical Officer shortly after. In March 2015, he moved to the position of Chairman and Chief Executive Officer of Conkwest. Less than two weeks ago, Conkwest changed their name to NantKwest, Inc and then filed for an IPO on July 16th as seen below:
The Cardiff-by-the-Sea, CA-based company plans to raise $151 million by offering 7.0 million shares at a price range of $20 to $23. At the midpoint of the proposed range, NantKwest would command a fully diluted market value of $2.2 billion.
The IPO seems to show strong interest already. An affiliate of Celgene Corporation (NASDAQ:CELG), an existing stockholder of Nantkwest, has agreed to purchase $17.0 million of Nantkwest stock in a separate private placement at the completion of the IPO at a price equal to the initial public offering price. Funds managed by Franklin Templeton, also existing stockholders of NantKwest, have indicated an interest in purchasing approximately $45.0 million of shares of stock at the IPO price as well.
Things have moved very fast since Dr. Soon-Shiong made his first equity investment in Conkwest and now he’s at the helm of a company that is looking at a $2.2 billion valuation. So what makes NantKwest such an exciting company? The answer is “cancer immunotherapy” which promises a revolutionary new way to fight cancer in which at least 19 pure-play companies that we know of are attempting to capitalize on.
One form of cancer immunotherapy is referred to as CAR-T, a method where T cells are removed from a patient and modified so that they express receptors specific to the particular form of cancer. The T cells, which can then recognize and kill the cancer cells, are reintroduced into the patient. This is what NantKwest is pursuing. In February of 2010, they granted synthetic biology leader Intrexon (NYSE:XON) a 17-year license to “NK-92 cells to develop and commercialize modified NK-92 cells that express Intrexon’s proprietary gene sequences“. NantKwest claims that over 40 biopharmaceutical companies have licensed their “haNK cells” for non-therapeutic use.
On the surface, this IPO looks very exciting. Cancer immunotherapy is saturated by players and then suddenly Dr. Soon swoops in and commands control of a company that after a successful IPO, will be right behind Celldex as the 6th most valuable cancer immunotherapy company by market cap according to the Nanalyze Cancer Immunotherapy motif. It will certainly be interesting to see what valuations the investment community assigns to NantKwest stock provided the IPO goes through successfully. Should this happen, we’ll look to add NantKwest to our Nanalyze Cancer Immunotherapy motif which then brings our list of pure play cancer immunotherapy stocks to a total of 20.
Here at Nanalyze, we hold the lion's share of our investing dollars in a portfolio of 30 dividend growth stocks. Become a Nanalyze Premium subscriber to access our report on Quantigence - A Dividend Growth Investing Strategy. We'll show you how we selected our 30 stocks and teach you how to build your own dividend growth stock portfolio.