GBS Goals For $20 Million IPO (GBS)

Fast Take

GBS (GBS) has filed to boost $20 million in an IPO of its models of frequent inventory and warrants, in keeping with an S-1 registration statement.

The agency is creating level of care diagnostic assessments for the SARS-CoV-2 virus.

GBS is a tiny agency that’s thinly capitalized and seeks to play in markets the place massive and deep-pocketed firms with important distribution capabilities are aiming their sources, so I will watch the IPO from the sidelines.

Firm & Know-how

New York, New York-based GBS was based to develop a saliva glucose biosensor and extra not too long ago switched its efforts to repurposing its know-how for some extent of care diagnostic testing system for the Covid-19 virus.

Administration is headed by Chief Government Officer Harry Simeonidis, who has been with the agency since 2017 and was beforehand Basic Supervisor of FarmaForce Restricted, and ASX-listed firm.

Beneath is a quick overview video of challenges for level of care Covid-19 testing:

Supply: CepheidNews

GBS has obtained no less than $20.2 million from buyers together with Life Science Biosensor Diagnostics Pty Ltd.

Market & Competitors

In keeping with a 2020 market research report by Grand View Analysis, the worldwide Covid-19 diagnostics market is at present an estimated $19.8 billion 2020 and is forecast to achieve $24.5 billion by 2027.

This represents a forecast CAGR of three.1% from 2021 to 2027.

Over 600 Covid-19 diagnostic assessments are in growth or authorized to be used.

A present problem is that completely different testing programs produce completely different accuracy charges over completely different wait time intervals.

Main aggressive or different trade members embody:

  • Becton, Dickinson and Firm (BD)

  • Abbott Laboratories (ABT)

  • Mylab Discovery Options

  • Fujirebio

  • Lucence / Akribis Methods

  • Roche (OTCQX:RHHBY)

  • PerkinElmer (PKI)

  • Neuberg Diagnostics

  • Danaher (DHR)

  • Quest Diagnostics (DGX)

  • Laboratory Company of America (LH)

  • Cepheid

  • Quite a few others

Monetary Efficiency

Beneath are related monetary outcomes derived from the agency’s registration assertion:

Supply: Firm registration assertion

As of June 30, 2020, GBS had $427,273 in money and $7.7 million in whole liabilities.

IPO Particulars

GBS intends to boost $20 million in gross proceeds from an IPO of 1.176 million models of frequent inventory and associated warrants, provided at a proposed midpoint value of $17.00 per unit.

Assuming a profitable IPO, the corporate’s enterprise worth at IPO would approximate $188.8 million, excluding the results of underwriter over-allotment choices.

Excluding results of underwriter choices and personal placement shares or restricted inventory, if any, the float to excellent shares ratio shall be roughly 12%.

Administration says it’ll use the online proceeds from the IPO as follows:

$8.60 million to acquire regulatory approvals, together with finishing any product growth required to satisfy regulatory necessities and establishing manufacturing services with enough capability for scientific analysis and industrial scale manufacturing of the biosensor structure together with SGT;

$0.75 million to market the SGT and set up a distribution community throughout the APAC Area; and

$8.55 million for working capital and common company functions.

Administration’s presentation of the corporate roadshow is available here.

The only real bookrunner of the IPO is Dawson James Securities.

Commentary

GBS is searching for public funding to proceed growth of its Covid-19 level of care testing system.

The agency’s financials present no income from product gross sales as GBS has modified course from producing a diabetes testing system to a Covid-19 testing system.

The market alternative for some extent of care testing system for the Covid-19 virus is massive and anticipated to develop considerably within the years forward.

Nevertheless, GBS faces widespread competitors from firms massive and small in what is going to seemingly be quite a few very fragmented markets.

Dawson James is the only underwriter and there’s no knowledge on IPOs led by the agency during the last 12-month interval.

As to valuation, it’s troublesome to discover a direct comparable for a Covid-19-only testing firm.

GBS is a tiny agency that’s thinly capitalized and seeks to play in markets the place massive and deep-pocketed companies with important distribution capabilities are aiming their sources.

Whereas I want the corporate effectively, I don’t see this as an investable IPO…it’s an excessive long-shot, so I will go on the IPO.

Anticipated IPO Pricing Date: October 28, 2020

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Disclosure: I/we’ve got no positions in any shares talked about, and no plans to provoke any positions throughout the subsequent 72 hours. I wrote this text myself, and it expresses my very own opinions. I’m not receiving compensation for it (aside from from Looking for Alpha). I’ve no enterprise relationship with any firm whose inventory is talked about on this article.

Editor’s Be aware: This text covers a number of microcap shares. Please pay attention to the dangers related to these shares.

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