Danforth Quarterly Flash | October 2017
Client Success Story: Krystal Biotech (NASDAQ: KRYS)
Achieving IPO readiness often takes many months, even for mature companies with deep finance teams. Yet for Krystal Biotech, a two-year-old startup with limited resources, the process moved in double time -- resulting in a successful $45.5M close on September 22 of this year. How did they make it happen?

With no CFO or internal finance staff, Krystal turned to Danforth Advisors in June. Given the company's pre-revenue stage, they were looking for interim financial guidance and support as opposed to building out a team of their own. Danforth consultant Mike Sheahan was enlisted for his SEC reporting expertise, with a three-month window to get the company's financials in IPO shape. Having been involved in four previous IPOs/filings, he was able to hit the ground running with virtually a clean slate.

"They had outsourced bookeeping and payroll, but there was little in terms of financial records with all the details necessary to pass financial audit," says Mike. The company also had to convert from an LLC to a C-Corp prior to going public. He owned the project from the ground up -- designing financial policies and procedures, reviewing the outside accounting work, preparing technical accounting papers, interfacing with auditors and attorneys, and reporting progress to the CEO along the way.

As CEO Krish Krishnan said following the closing, "It got done in record time and could not have happened without Danforth's help, especially Mike Sheahan. Simply put, he was awesome."
Five Fast Facts: IPO Readiness
IPO prep and execution is a key part of our practice, and we've had the opportunity to facilitate nearly 20 offerings/filings in the past four years; three of which took place last quarter.

Danforth founders Gregg Beloff and Daniel Geffken each presented at IPO readiness workshops in the past month, and here we share five quick takeaways.

1) Life science IPOs have outperformed all other S&P sectors in 2017; up nearly 30% YTD and with 85% of offerings pricing at or above range. However, the fact that more than 50% of 2015 IPOs now trade at 25+% below their offering prices continues to weigh on appetite. Overall deal volume is down from the highs of 2014-2015, and there is more focus on maturity and quality with exuberance limited to select areas such as immuno-oncology.

2) Of the priced deals, 85% of biopharma companies had advanced lead products to at least phase 2 and 10% of companies had launched commercial product.

3) About two thirds of recent life science IPOs have been supported by crossover rounds, continuing a trend of the past several years. Prior crossover funding is associated with higher enterprise valuations and better after market performance.

4) SEC hot buttons include revenue recognition, segment allocation/reporting, stock compensation and presentation quality. Advanced planning for addressing questions in these areas will speed the SEC process and reduce potentially costly review delays.

5) Pre-marketing public market investors through non-deal roadshows will help support aftermarket stock price and reduce deal turnover.  

How We Help : A well orchestrated IPO is best achieved with careful preparation and planning as many as two years in advance. The Danforth team is well equipped to help from start to finish, including facilitation of audits for S-1 readiness, issuing PCAOB-compliant financial statements, drafting the S-1 and providing the right connections to the buy and sell side.

Photo: Daniel Geffken joins fellow Life Science IPO Summit presenters to ring the NYSE opening bell on September 29. Click the image to view video.
Q3 Clients in the News
New Senior Team Member
We are very pleased to introduce Hamilton Mehlman, who has joined the firm in the newly-created role of Chief Operating Officer. Hamilton has spent more than 25 years in the life sciences and biotechnology sectors, including senior roles in corporate management, product and business development, strategic consulting and institutional investment. He most recently served as CEO of Parabase Genomics, an innovator in genetic testing that he led from the earliest stages. He previously held senior operating and consulting positions for life science companies including Advanced Metabolic Systems, Dianon Systems and MediSense. Hamilton’s finance experience spans 17 years as an analyst and portfolio manager, investing in private and publicly traded life science companies. He holds an AB from Harvard College and MBA from Harvard Business School. Contact: hmehlman@danforthadvisors.com
New Clients
In Q3 we welcomed both new and returning clients, ranging from stealth mode startups to a $1.2B market cap company undergoing leadership transition.
  • Epizyme (NASDAQ: EPZM)
  • pSivida (NASDAQ: PSDV)
  • NicOx (COX: FP)
  • SpringWorks Therapeutics
  • Indi Molecular
  • Groups Recover Together
  • Halloran Consulting Group
  • Censio
  • Theriana Pharmaceuticals
  • Sheperd Therapeutics
  • Torpedo Diagnostics
  • MonoSol Rx
  • Proclara Biosciences
We're Hiring!
Danforth is always looking for talented finance professionals to join our team of consultants, ranging from controllers to CFOs. Please contact Alison Leaton (aleaton@danforthadvisors.com), Director, Talent Acquisition & HR, for information about flexible, part-time opportunities both within and beyond the Boston area.