written by reader Opgen IPO – opportunity or too risky

By laskinp, April 30, 2015

I got a call today about ”an exciting entry into the Opgen IPO”. To be honest, I never heard of Opgen so I didn’t take the ”exciting entry”. Instead I decided to see what Opgen has to offer.

First off, Opgen.com is a biotech company focused on developing diagnostic tests for ”healtcare providers.. to combat life-threatening antibiotic-resistant infections..”

Opgen has a product that tests for multiple drug resistant genes in a patients specimen. The test identifies the organism and up to ten genes responsible for drug resistance.

The value proposition is that hospitals can test patients and determine if they have a bacterial infection (think MRSA) plus identify what drugs the organism may be resistant to. Once that is known the patient can be prescribed the appropriate antibacterial.

Pricing for the IPO is between $5.50 and $6.50 per unit. A unit is one share of Opgen common stock and a warrant to purchase additional shares.

The risk comes in that Opgen is a very small biotech with a large burn rate. Their auditors in January said that the business was at risk of not being sustainable. The IPO is to raise cash to build out their sales and marketing team plus further development of their products. Oh.. and keep them floating along.

I tend to not have great luck with IPOs. When I have taken a bite, I find that I should have just waited a few weeks or months before buying. However, Opgen is addressing a need (rapid diagnostic plus drug resistance pattern). The question is whether this raise is enough to keep them afloat as they ramp up sales.
What do you all think?

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