What Is ASP Isotopes?
Boca Raton, Florida-based ASP Isotopes (ASPI) was founded to develop enrichment technologies for Molybdenum-100 for use in nuclear imaging and Uranium-235 for potential use in small modular reactors.
Management is headed by co-founder, Chairman and CEO, Paul E. Mann, who has been with the firm since inception in September 2021 and was previously CFO of biotechnology company PolarityTE (PTE) and otherwise has an investment background.
The company has licensed relevant technology from Klydon Proprietary Ltd. and intends to use an aerodynamic separation process (ASP) as the basis for its approach.
As of June 30, 2021, ASP has booked a fair market value investment of approximately $11.6 million as of June 30, 2021 from investors including Broadband Capital Investments and various individuals.
ASP’s Market & Competition
According to a 2022 market research report by Grand View Research, the global market for nuclear medicine was an estimated $8.1 billion in 2021 and is forecast to reach $24.3 billion by 2030.
This represents a forecast CAGR of 13.0% from 2021 to 2030.
The main drivers for this expected growth are favorable reimbursement policies in the U.S. as well as an increase in demand for services due to an aging global population.
Also, the chart below shows the historical and projected future growth trajectory for the U.S. nuclear medicine market:
Major competitive or other industry participants include:
Jubilant Life Sciences Ltd
Nordion (Canada), Inc.
Bracco Imaging S.P.A
The institute for radioelements (IRE)
NTP Radioisotopes SOC Ltd.
The Australian Nuclear Science and Technology Organization
Lantheus Medical Imaging, Inc.
Eckert & Ziegler
The firm also seeks to provide nuclear fuel to small modular reactor markets.
ASP Isotopes’ IPO Date & Details
The initial public offering date, or IPO, for ASP Isotopes is expected to be October 18, 2022, and scheduled to be available for retail investors to trade on the open market starting October 19, 2022.
(Warning: Compared to stocks with more history, IPOs typically have less information for investors to review and analyze. For this reason, investors should use caution when thinking about investing in an IPO, or immediately post-IPO. Also, investors should keep in mind that many IPOs are heavily marketed, past company performance is not a guarantee of future results and potential risks may be understated.)
ASPI intends to sell 2 million shares of common stock at a proposed midpoint price of $6.00 per share for gross proceeds of approximately $12.0 million, not including the sale of customary underwriter options.
No existing or potentially new shareholders have indicated an interest to purchase shares at the IPO price.
Assuming a successful IPO at the midpoint of the proposed price range, the company’s enterprise value at IPO (excluding underwriter options) would approximate $179.4 million.
The float to outstanding shares ratio (excluding underwriter options) will be approximately 6.23%. A figure under 10% is generally considered a ‘low float’ stock which can be subject to significant price volatility.
Per the firm’s most recent regulatory filing, it plans to use the net proceeds as follows:
We initiated Phase 1 of the Mo-100 development plan under the turnkey contract, targeting 5 kg/year of 95% enriched Mo-100, in October 2021 and we expect to complete this phase using cash on hand during the second half of 2022. Upon completion of Phase 1, we intend to use a portion of the net proceeds from this offering (currently estimated to be approximately $6 million of the total net proceeds) to initiate and fully fund Phase 2 of the Mo-100 development plan under the turnkey contract, which targets expanded production of up to 20 kg/year of 95% enriched Mo-100. We intend to use the remainder of the net proceeds we receive from this offering for research and development for potential additional isotopes that we may offer, as well as headcount costs, working capital and other general corporate purposes.
(Source – SEC)
Management’s presentation of the company roadshow is not available.
Regarding outstanding legal proceedings, management says the firm is not currently a party to any legal proceedings that are material.
The sole listed bookrunner of the IPO is Revere Securities.
How To Invest In The Company’s Stock: 7 Steps
Investors can buy shares of the stock in the same way they may buy stocks of other publicly-traded companies, or as part of the pre-IPO allocation.
Note: This report is not a recommendation to purchase stock or any other security. For investors who are interested in pursuing a potential investment after the IPO is complete, the following steps for buying stocks will be helpful.
Step 1: Understand The Company’s Financial History
Although there is not much public financial information available about the company, investors can look at the company’s financial history on their Form S-1 or F-1 SEC filing (Source).
Step 2: Assess The Company’s Financial Reports
The primary financial statements available for publicly-traded companies include the income statement, balance sheet, and statement of cash flows. These financial statements can help investors learn about a company’s cash capitalization structure, cash flow trends and financial position.
My summary of the firm’s recent financial results is below:
- The company’s financials show no revenue and various R&D and G&A expenses associated with its early-stage development efforts.
- Free cash flow for the six months ended June 30, 2021 was negative ($3.1 million).
- The firm currently plans to pay no dividends and intends to retain any future earnings to reinvest back into the company’s growth initiatives.
Step 3: Evaluate The Company’s Potential Compared To Your Investment Horizon
When investors evaluate potential stocks to buy, it’s important to consider their time horizon and risk tolerance before buying shares. For example, a swing-trader may be interested in short-term growth potential, whereas a long-term investor may prioritize strong financials ahead of short-term price movements.
Step 4: Select A Brokerage
Investors who do not already have a trading account will begin with the selection of a brokerage firm. The account types commonly used for trading stocks include a standard brokerage account or a retirement account like an IRA.
Investors who prefer advice for a fee can open a trading account with a full-service broker or an independent investment advisor, and those who want to manage their portfolio for a reduced cost may choose a discount brokerage company.
Step 5: Choose An Investment Size And Strategy
Investors who have decided to buy shares of company stock should consider how many shares to purchase and what investment strategy to adopt for their new position. The investment strategy will guide an investor’s holding period and exit strategy.
Many investors choose to buy and hold stocks for lengthy periods. Examples of basic investing strategies include swing trading, short-term trading or investing over a long-term holding period.
For investors wishing to gain a pre-IPO allocation of shares at the IPO price, they would ‘indicate interest’ with their broker in advance of the IPO. Indicating an interest is not a guarantee that the investor will receive an allocation of pre-IPO shares.
Step 6: Choose An Order Type
Investors have many choices for placing orders to purchase stocks, including market orders, limit orders and stop orders.
Market order: This is the most common type of order made by retail traders. A market order executes a trade immediately at the best available transaction price.
Limit order: When an investor places a buy limit order, they specify a maximum price to be paid for the shares.
Stop order: A buy-stop order is an order to buy at a specified price, known as the stop price, which will be higher than the current market price. In the case of buy-stop, the stop price will be lower than the current market price.
Step 7: Submit The Trade
After investors have funded their account with cash, they may decide on an investment size and order type, then submit the trade to place an order. If the trade is a market order, it will be filled immediately at the best available market price.
However, if investors submit a limit order or stop order, the investor may have to wait until the stock reaches their target price or stop-loss price for the trade to be completed.
The Bottom Line
ASPI is seeking public capital market investment to fund the expansion and ramp-up of its Mo-100 enrichment capabilities.
The market opportunity for producing products for use in the nuclear medicine market is large and likely to grow at a similar high rate of growth as overall demand grows in the coming years, so the firm enjoys positive industry growth dynamics.
Nuclear fuel markets also represent a potential long-term growth opportunity.
Revere Securities is the sole underwriter, and there is no data on IPOs led by the firm over the last 12-month period.
The primary risk to the company’s outlook is its tiny size and lack of revenue history.
As for valuation, management is asking IPO investors to pay an enterprise value of approximately $180 million despite disclosing:
We have no products approved for commercial sale or existing customers and have generated no revenues to date. We have not yet built a functioning Mo-100 or U-235 enrichment plant or even demonstrated the ability to produce Mo-100 or U-235 using the ASP technology.
Given the unproven status of the technology, the pre-revenue stage of the company and the ultra-high-risk nature of the IPO, my outlook on it is Neutral.
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