EnGen Bio is raising a priced round with an $8 million pre-money valuation. The valuation is on the higher side compared to non-pharma companies at a similar stage. However, for a pharma company, the valuation is fair considering the upside potential. Overall, EnGen Bio’s price rating is below average.  

According to Fortune Business Insights, the US vaccines market is estimated to be $30 billion. The global pandemic has drastically accelerated the market growth of vaccines. North America alone contributed 52% to the global vaccine market growth. And growth for 2021 is expected to be 81.7%.

As the spread of COVID-19 slows down in the coming years, the growth rate of the vaccine market is also expected to decrease. But the overall market size will remain in an upward trend with a CAGR of 10.7% from 2021 to 2027. Therefore, the overall market rating for EnGen Bio is well above average in terms of both market growth and current addressable market.

EnGen Bio was founded by Dr. Mark Alfenito, who also acts as the president and CEO. Dr. Alfenito has more than 20 years of biotech entrepreneurial experience. He has led $600 million in corporate deals and transactions and founded three pharmaceutical startups which resulted in two initial public offerings and one acquisition. In short, Dr. Alfenito has the track record investors are looking for in a startup founder. In addition to the startup experience, Dr. Alfenito also holds 13 patents in different applications from the industry. Dr. Alfenito obtained a BS from Cornell University and a PhD in cellular and developmental biology from Harvard University. 

The other core team members are Dr. Mark Baer and Adam Guttmann, who have more than 50 years of combined biopharma and therapeutic antibodies experience. The team has produced a combined total of six FDA-approved drugs and more than 50 patents. Therefore, a highly experienced founder and team members with superior academic credentials warrant a high team rating.

A few major players dominate the vaccine market. But there are many small vaccine research labs across the US. Pharmaceutical companies by nature have a high barrier to entry and require a high level of capital. Therefore EnGen Bio rates slightly below average in terms of competition.

In terms of defensibility and product differentiation, EnGen Bio has seven flu vaccine patents in major strategic markets. It is also one of the few vaccine research entities that could potentially develop one antibody to respond to all type A flu viruses. In addition, the veterinary applications for animals are unique as well. Therefore, EnGen Bio scored high ratings on defensibility and product differentiation categories, which results in an above average total differentiation rating.

EnGen Bio is a pre-revenue company and its final product is still in research and development. Naturally, it scored a low rating in the annual revenue category. However, the company has a relatively low monthly burn rate, especially for a pharmaceutical company, at $38,000. It also successfully raised more than $1.7 million in the past. This makes up for the lack of cash inflow from revenue. It’s unclear how long it will take EnGen Bio to develop its final product. But a long development phase is common for pharmaceutical companies. 

Due to the lack of cash inflow and long potential lead time for product development, EnGen Bio scores an average rating for performance. 

The only risk regarding EnGen Bio’s team is the fact that it’s small. However, it plans on using the new funding round to expand the team. The market risk will increase after the pandemic is over, when bigger pharmaceutical companies shift their focus to other areas. EnGen Bio will still need continuous funding for the next critical phase of its product development. This results in an above-average funding risk. The biggest risk is financial, as investors might have to wait a long time to see results. This will likely decrease investors’ annualized returns. Therefore, the risk rating for EnGen Bio is on the higher side.

As with numerous pharmaceutical companies that are still conducting research and development, EnGen Bio’s future remains uncertain. The product may take a long time to develop and get approval. Even though the science behind the universal antibody is compelling, “one-size-fits-all” could be too good to be true. In addition, investors should be aware that a successful scientific discovery does not always lead to a successful application and commercialization. At this stage, EnGen Bio still has a lot of heavy lifting to do.

EnGen Bio has a great team and is targeting a high-growth market. The founder has an excellent track record. Even if the product risk is high, great founders can often pivot and find ways to meet the market demand. COVID-19 has accelerated the development of vaccines and perhaps propelled flu prevention efforts among pharmaceutical companies. This opens the door to many potential exit opportunities for EnGen Bio. The fair valuation considering its high upside potential could yield a sizable return.

Overall, EnGen Bio has been rated a Deal to Watch because of its highly experienced team, large addressable market, and substantial upside potential. The risks  are distinctive in that the company is still in the research and development phase. But as the demand for future virus prevention increases due to COVID-19, EnGen Bio’s prospects look promising.

For questions regarding the KingsCrowd staff pick or ratings for this company, please reach out to [email protected].

Analysis written by Zee Zhong.