IsoPlexis Proposes Terms For $125 Million IPO

Donovan Jones

Oct 1, 2021

IsoPlexis is seeking public capital market investment to fund its continued ramp up of commercializing its cell analysis platform.

Summary

IsoPlexis has filed to raise $125 million in an IPO.

The firm sells its single-cell analysis platform to researchers worldwide.
ISO has grown from a low revenue base but is generating high operating losses and the IPO appears priced for perfection.

Quick Take
IsoPlexis (ISO) has filed to raise $125 million in an IPO of its common stock, according to an S-1/A registration statement.

The firm has developed technologies that enable a fuller view of protein function in the human body.

Company & Technology
Branford, Connecticut-based IsoPlexis was founded to create a single cell proteomics platform to provide an end-to-end system to 'help develop more durable therapeutics, overcome therapeutic resistance and predict patient responses for' a variety of therapeutic approaches.

Management is headed by co-founder and CEO Sean Mackay, who has been with the firm since inception and previously worked at Lazard as a consultant to life science and medical device companies.

The company's primary offerings include:

Instruments

Chip consumables

Software

IsoPlexis has received at least $154 million in equity investment from investors including Northpond Ventures, Perceptive Advisors, Spring Mountain Capital, North Sound Ventures, Connecticut Innovations, Danaher Innovation Center and BlackRock.

Commentary
IsoPlexis is seeking public capital market investment to fund its continued ramp up of commercializing its cell analysis platform.

The firm's financials show a high growth rate in topline revenue, strong gross profit increase, but downward trending gross margin, increasing operating and net losses and growing cash used in operations.

Management views the market size as at least $12 billion in the coming years.

Morgan Stanley is the lead underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 13.6% since their IPO. This is a mid-tier performance for all major underwriters during the period.

The primary risk to the company's outlook is its ability to continue to penetrate its target markets against large, entrenched competitors.

As for valuation, while it is a stretch to compare ISO to Bio-Rad due to Bio-Rad's larger product scope, ISO's valuation expectations are quite high in revenue multiple terms.

This valuation expectation, combined with the firm's high operating losses and cash burn, means the IPO appears to be priced for perfection despite only generating revenue at a $15 million annual run rate in 2021.

While the firm has promise and is operating in a fast-growing industry, management will need to prove it can produce much higher revenue numbers to grow into its valuation, so I'll pass on the IPO.

Expected IPO Pricing Date: October 7, 2021


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