IPO News: Should you invest in RenovoRx’s upcoming IPO?

As healthcare startups continue to flock to the stock market, extending the hectic activity seen in the first half, the IPO market is probably bracing for a record year. RenovoRx, a developer of novel cancer therapy and medical devices, is preparing to go public this week. 

Novel Cancer Therapy

The operations of RenovoRx have been focused on developing an effective therapy for cancer. Currently, it is studying a targeted treatment, investigating its effect on reducing the spread of cancer thereby extending survival and improving patients’ quality of life. It has developed a system for effectively delivering chemotherapy to difficult-to-treat areas like the pancreas.

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The Silicon Valley-headquartered biopharmaceutical firm is planning to raise around $22 million by offering 1.85 million shares for $11-13 per unit. The management intends to use proceeds from the offering mainly for completing ongoing clinical trials and launching new studies, besides general corporate purposes.

NASDAQ Nod

The sole book-running manager in the offering is Roth Capital Partners. Meanwhile, the Nasdaq Capital Market has granted approval to list the stock under the ticker symbol RNXT, which is expected this week. RenovoRX was founded by Kamran Najmabadi and Ramtin Agah in 2009.

RenovoGem, the company’s first product candidate that is a combination of intra-arterial gemcitabine therapy and delivery device RenovoCath, is in the advanced stages of development. It has been regulated by the FDA as a novel oncology drug product. In the phase-III clinical trial, the effectiveness of the company’s trans-arterial micro-perfusion, compared to systemic chemotherapy, is also evaluated. The system is designed to give chemotherapy directly to the affected areas, rather than delivering intravenously. So far, the trial has yielded encouraging results.

Risks

Meanwhile, the company would require extra funding to complete the studies successfully and bring its products to the market. Raising additional capital may cause dilution to current stockholders, including those who purchase the stock in the IPO. Once launched, the products will likely face stiff competition in terms of market share and pricing.

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Like any other early-stage pharma company, RenovoRX’s future prospects would depend entirely on securing FDA approval for its products. While the business has not been materially impacted by the pandemic yet, it might get affected if the virus-related disruption continues. Also, the company has not generated revenue from product sales and might not do so in the near future.

Financial Data

In fiscal 2020, RenovoRx recorded total research and development expenses of $2.4 million, down from the previous year’s $3 million. In the absence of revenues, the company incurred a loss of $3.8 million last year, which is broadly in line with the prior-year number.