Bind Review

Financial Analysis and Projections

Out of the three comparables, Cancer Genetics are in the Stage IV trials, which is still a long way off for BIND. Isoray, Acelrx and Tetraphase Pharmaceuticals although in Stage III and completion of some Stage II trialing, they are a much more relevant and accurate comparable for BIND. The weighted average also reflects this, with only 15% of the average coming from Cancer Genetics, while the remaining 85% is split up between Isoray (25%), Acelrx (30%) and Tetraphase Pharm. (30%). If we take into consideration the business cycle of which BIND and the comparable are at we can explain the higher than industry average multiple. Since BIND and its comparables are in an early stage (reasearch/development) their book value is going to be much lower than their market value. Similarly the enterprise value of an early sage bio company is also going to be much higher than its sales. The value in early bio companies is justified not by sales and hard numbers but by patents, FDA approvals and successful trials.

In analysing the financial position and projections of BIND Therapeutics, it is pertinent to take into consideration the nature of the biomedical industry and the financial cycles of companies within the industry. Historically, BIND has suffered relatively large net losses, made up mostly of high research and development costs, which we expect to continue. Biomedical companies typically have very high cash burn rates, low incomes and profits in the early stages of development. in light of this, we have chosen comparable firms at a similar stage of growth to BIND to facilitate an easy evaluation of our firm.

Key assumptions

1. A market growth rate of 7.5% for the first five years, and a growth rate of 4% for years following. While this is quite a conservative assumption given the fast growing nature of the industry, we have included a scenario analysis of a more bullish market.

2. We have focused particularly on the cancer...