Dr. Patrick Soon-Shiong, the billionaire entrepreneur who recently received an eye-popping $150 million pay package, is taking another of his mysterious — and highly valued — companies public.
NantHealth, a bioinformatics startup that’s part of Soon-Shiong’s broader vision for transforming health care, has raised more than $600 million in private equity so far, including $250 million from the government of Kuwait. The most recent of those investments valued the company at $2 billion.
Compared to that, the proposed IPO looks like chump change: Soon-Shiong aims to raise just $92 million from the public offering.
So the decision to go public is clearly not about raising capital. Instead, it could signify a renewed sense of faith in the biotech capital markets — coming from a top-tier investor.
Soon-Shiong first announced plans for NantHealth to go public in June last year, but changed his tune in November when the biotech stock market turned sour.
“We’re basically ready,” Soon-Shiong told the Los Angeles Times in November. “The problem is, we don’t want to go out in the current market. There is no reason for us to go out there in a bear market.”
Despite a brief uptick in April, major biotech index funds such as the iShares NASDAQ Biotechnology Index and the S&P Biotech ETF are down about 25 percent year-to-date, as compared to a 5.4 percent drop in the broader NASDAQ.
However, there are hopeful signs: Gene-editing player Intellia recently raised $163 million in the year’s largest biotech IPO. That beat out CRISPR competitor Editas Medicine (EDIT), which raised $94 million in a February IPO.
A pickup in the biotechnology markets couldn’t come too soon for Soon-Shiong: The stock price for his flagship company, NantKwest (NK), has cratered since it went public last July at $35 per share. These days, it’s trading below $9.
Soon-Shiong has long boasted of a vision to “transform health care” — but his materials and methods are as cryptic as they are grandiose.
The tagline for NantHealth, for instance, is “connecting knowledge at a global, interoperable scale from home to clinic to hospital to benefit a single patient and the whole of humanity.” The wording for each of his other companies is similarly vague.
The IPO prospectus pulls back the veil a little on NantHealth’s plans, however. The company, which was founded in 2007, already has a software system on the market that promises to analyze “billions of molecular, clinical, operational and financial data points.” It’s geared towards providers, payers, and self-insured employers to track health care efficiency.
NantHealth says it has more than 450 revenue-generating clients, including the National Health Service in the United Kingdom, the Canadian Health System, and several hospital systems across America.
In addition to the IPO, NantHealth plans to unveil a new product this quarter: GPS Cancer.
The diagnostics tool, which Soon-Shiong announced as part of a brashly ambitious plan he calls Cancer MoonShot 2020, works by analyzing a patient’s genome and proteome (the proteins expressed by their genome) to learn how their personal chemistry works. From there, the tool aims to gauge how the patient will react to certain drugs, and helps physicians lay out a treatment plan.
According to the IPO prospectus, NantHealth is still losing money: It lost $72 million last year and lost $84.6 million in 2014. But its revenue is growing, to $58.3 million last year — up from $33.9 million in 2014.
Soon-Shiong’s ambition can be seen in the prospectus as well: NantHealth wagers the market for its software analytic system, called CLINIC, and GPS Cancer exceeds $50 billion.
The regulatory filing says he plans to “devote on average at least 20 hours per week” to the company while also working on his other projects.
In addition, Soon-Shiong was recently named to advise Vice President Joe Biden on the Obama administration’s “cancer moonshot.”