This biotech is on the list of the top 10 IPO performers for 2020. It is expected to grow by more than 34% next year.
Berkeley Lights, Inc. (BLI)
From Cabot Early Opportunities
Aggressive Pick
Berkeley Lights (BLI) is arguably the most attractive pure-play company in the cell-based product market. The company’s technology can measure tens of thousands of single cells in parallel. That means it can find the best cell out of millions, and do so quickly.
Moreover, Berkeley’s platform enables functional characterization quickly without killing cells. That means it helps users save the best cells for downstream development. In contrast, competing solutions often work slower and with high cell death rates. That crushes the ROI of the biopharma company using those solutions.
This is why biopharma companies, CROs and CDMOs are increasingly turning to Berkeley Lights. Its platform helps them do everything they need to find therapeutic candidates faster and cheaper, often shaving three to five months off the process, boosting yields and reducing manufacturing costs. It’s a win-win-win.
The company has three automation systems. Beacon launched in 2016, Lightning launched in 2019 and Culture Station just launched in January. Berkeley also sells workflow and automation software, and offers a portfolio of consumables (chips, reagents, etc.).
Berkeley has also adapted its antibody discovery workflow to allow the recovery of neutralizing antibodies from Covid-19 patients, which helps researchers discover therapies.
In Q3 2020 management said it sold eight systems for $12.4 million, twice what it sold in Q2. CROs and CDMOs bought half of them. The addition of new workflows and assays in the quarter aided in sales of at least six of those systems. Two more workflows are being added in 2021, which should keep system sales flowing.
Adding in recurring revenue ($3.7 million) from consumables and partnership revenue ($2.1 million) Berkeley delivered quarterly revenue of $18.2 million, up 16%.
While not a huge revenue base today—estimated 2020 revenue is just $60 million, up 6% over 2019—Berkeley’s growth should take off as it places more systems in the market and starts to generate more significant recurring revenue from subscriptions and consumables. Looking into 2021 revenue could jump by 50% to $90 million and adjusted EPS loss could be cut by 25% to -$0.78.
BLI came public at 22 on July 17, 2020 and soared 198% its first day. Since then, the stock has traded in a wide range; moves of 15% to 20% within a week or two are not uncommon. But the trend is up and BLI has recently made a series of higher highs and higher lows.
With a market cap near $6 billion, a high valuation and a relatively recent IPO (July 17) Berkeley lights isn’t without risk. But the many merits make a stake in this company attractive for risk-tolerant investors. Adjust your position size based on your own risk profile.
Tyler Laundon, Cabot Early Opportunities, cabotwealth.com, 978-745-5532 December 17, 2020