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A quick look at Vitro Biopharma
Vitro Biopharma, Inc. (VTRO) has filed a request to raise $10 million in an initial public offering of its common stock, according to an amended S-1/A registration statement.
The company is developing stem cell-based treatments for Pitt-Hopkins Syndrome and Long-COVID.
VTRO is still in the pre-clinical development stage, so the IPO is associated with an extremely high level of risk.
My take on the IPO is sell.
Overview and Market for Vitro Biopharma
Denver, Colorado-based Vitro was formed to develop its AlloRx stem cell therapy platform, which produces drug candidates from “culture-expanded mesenchymal stem cells derived from umbilical cord Wharton’s jelly.”
Management is led by Chief Executive Officer Christopher Furman, who has been with the firm since July 2022 and was previously a Managing Director at Virtus Investment Partners.
The company’s pipeline includes treatments for Pitt-Hopkins syndrome [PTHS] and post-acute episodes of SARS-CoV-2 [PASC].
The company expects the FDA-approved trials to start in late 2023 or early 2024, delaying an earlier estimate by one year.
Below is the current status of the Company’s drug development pipeline:
corporate pipeline (SEC)
Vitro has booked $29.8 million of fair market value investments in equity, debt and convertible debt from investors as of April 30, 2023.
According to a 2022 Science Daily market research report, the market for Pitt-Hopkins syndrome treatment is difficult to pinpoint because “only about 500 cases of the syndrome have been reported worldwide since it was first described by Australian researchers in 1978.”
The report states, “Some estimates suggest that there could be more than 10,000 cases in the United States alone.”
The research report also states that the UNC School of Medicine has shown that gene therapy could potentially prevent or reverse “many deleterious effects” of the disease.
Key competing vendors offering or developing related treatments include:
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Athersys
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BrainStorm cell therapeutics
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cellularity
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color tribe
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destiny therapeutics
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Longeveron
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medipost
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Pluristem Therapeutics
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SanBio Co
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Stemedica cell technologies
The Company is also pursuing treatments for other, larger potential market opportunities.
financial status
Below are the Company’s financial results for the periods indicated:
Operating Invoice (SEC)
As of April 30, 2023, the Company had cash on hand of $251,720 and total debt of $7.3 million, a sharp decrease in cash and a significant increase in debt over the period ended April 30 corresponds to 2022.
Details on Vitro’s IPO
VTRO intends to sell approximately 1.8 million common shares at a proposed mid-point price of $5.50 per share for gross proceeds of approximately $10 million, excluding the sale of customary underwriter options.
No existing or potential new shareholder has shown any interest in buying shares at the IPO price.
Assuming a successful IPO in the middle of the proposed price range, the Company’s enterprise value at IPO (excluding underwriter options) would be approximately $31.4 million.
The float to outstanding share ratio (excluding underwriter options) will be approximately 27.15%. Anything below 10% is generally considered a “low float” stock, which can experience significant price volatility.
Management says the company qualifies as an “emerging growth company” under the JOBS Act 2012 and may choose to benefit from reduced reporting requirements for public companies; Potential shareholders would receive less information for the IPO and going forward as a publicly traded company under the requirements of the law.
The company also claims to be a “smaller reporting company,” meaning it may be exempt from stricter pre- and post-IPO financial reporting requirements. For a non-exhaustive comparison of emerging growth company reporting requirements and smaller reporting company reporting and associated requirements, a summary is provided here.
Pursuant to the Company’s most recent regulatory filing, the plan is to use the net proceeds as follows:
Approximately $3.8 million to fund pre-clinical activities for AlloRx stem cell therapy for the treatment of PTHD by initiating and completing our planned Phase 1/2a clinical trial and obtaining safety, dosing/tolerability and efficacy data therefrom and through the initiation and completion of all subsequent phase 2b/3 clinical trials and receipt of the resulting dosing/tolerability and efficacy data;
Approximately $2.3 million of funding, along with our existing cash funds and any additional funds received upon cash exercise of our outstanding warrants, preparatory clinical activities for AlloRx stem cell therapy for the treatment of long-COVID through the commencement and completion of our planned phase 1/2a clinical study and receipt of data on safety, dosing/tolerability and dosing effectiveness therefrom;
approximately $0.2 million to fund preclinical activities for AlloRx stem cell therapy for the treatment of lupus (SLE) pending completion of our IND filing;
approximately $0.05 million to fund preclinical activities for AlloRx stem cell therapy for the treatment of MS pending completion of our IND filing; And
the remainder, if any, for working capital and other general corporate purposes.
Based on our current operating plan, we anticipate that our existing cash combined with the net proceeds from this offering will be sufficient to support our working capital and capital expenditure needs for at least the next 12 months.
(Source – SEC.)
The Company’s stock incentive plan currently provides for a total of 346,154 shares or 5.06% of the total shares outstanding immediately following the IPO.
A presentation of the company roadshow by the management is not available.
No legal action is being taken against the company.
The only publicly traded underwriter of the IPO is ThinkEquity.
Comment on Vitro Biopharma
VTRO is seeking public capital market funding to advance its pipeline of drug treatment candidates.
The company’s lead candidates include treatments for Pitt-Hopkins syndrome [PTHS] and post-acute consequences of SARs-CoV-2 [PASC].
The Company expects to begin FDA-approved studies in late 2023 or early 2024.
The addressable market opportunity for the treatment of Pitt-Hopkins Syndrome is likely very small, although the company is pursuing treatment candidates for other potentially larger markets such as Long-Covid.
Management has not disclosed any collaborative relationships among major pharmaceutical companies and the Company’s investor syndicate does not include any well-known life science venture capital firms.
ThinkEquity is the sole underwriter and the three IPOs the company has completed in the past 12 months have generated an average negative return (53.8%) since their IPO. This is a bottom performance for any major underwriter over the period.
Risks to the company’s prospects as a public company include the preclinical status of its entire drug candidate pipeline.
As for valuation expectations, management is asking IPO investors to pay an enterprise value of $31.4 million, well below the typical range for a large biotech company to go public.
Vitro Biopharma, Inc. is still in the pre-clinical development phase, so the IPO is associated with an extremely high level of risk.
My take on the IPO is sell.
Estimated price date for the IPO: August 8, 2023.
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